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SAN FRANCISCO PUBLIC LIBRARY 



3 1223 03273 6408 




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San Francisco Public Library 

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100 Larktf Floor 

San A 94102 

REFERENCE BOOK 

Not to be taken from the Library 






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HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 







DOCUMFNTS DEPT. 

UN 2 4 1993 



PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 






WEDNESDAY, JUNE 9, 1993 
2:05 P.M. 



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1 SENATE RULES COMMITTEE 

2 STATE OF CALIFORNIA 
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12 STATE CAPITOI 

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WEDNESDAY, JUNE 9, 1993 
19 2:05 P.M. 

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25 Reported by: 
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Evelyn J. Mizak 
Shorthand Reporter 



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1 APPEARANCES 

2 MEMBERS PRESENT 

3 SENATOR DAVID ROBERTI, Chair 

4 SENATOR WILLIAM CRAVEN, Vice Chair 

5 SENATOR RUBEN AYALA 

6 ji SENATOR ROBERT BEVERLY 

7 n SENATOR NICHOLAS PETRIS 
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9 STAFF PF 

10 CLIFF BERG, Executive Officer 

11 PAT WEBB, Committee Secretary 

12 RICK ROLLENS, Consultant on Bill Referrals 

13 NANCY MICHEL, Consultant on Governor's Appointments 

14 ALSO PRESENT 

15 jj ALBERT ARAMBURU, Director 

California Conservation Corps 

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ROBERT A. WOLF, Member 

17 California Transportation Commission 
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18 SENATOR ROBERT PRESLEY 

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INDEX 



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Proceedings 1 

Governor ' s Appointees : 

ALBERT ARAMBURU, Director 

California Conservation Corps 1 

Background and Experience 1 

Questions by SENATOR AYALA re: 

Mission of CCC 4 

Entrepreneurship in CCC 5 

CCC ' s Involvement with Repairing Riot- 
Caused Damage in L.A 6 

Removal of Graffiti for Cities and Counties . . 6 

Negotiations with Gangs 6 

Questions by SENATOR CRAVEN re: 

Installation in Escondido 7 

Erasing of Gang Graffiti 8 

Percentage of Corps Members Who Leave 

before Enlistment Expires 9 

PBS Film on CCC 10 

Motion to Confirm 11 

Committee Action 11 

ROBERT A. WOLF, Member 

California Transportation Commission 11 

Introduction and Endorsement by SENATOR 

ROBERT PRESLEY 11 

Background and Experience 12 

Questions by SENATOR CRAVEN re: 

Contracting Business 13 



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INDEX I Continued 

Possible Conflict of Interest Problems . . 13 

Questions by SENATOR AYALA re: 

Definition of Balanced Transportation System . . 14 

Questions by SENATOR PETRIS re: 

Creation of Long-term Plan with Balanced 
Transportation Modes 16 

Compilation of Rail Vs . Highway 

Funding 16 

Authority of Commission 17 

Forecast of Figures, Rail vs. Highway, for 

Coming Year 18 

Basis for Programming Future Transportation 
Allocations and Needs 19 

Little Hoover Commission's Finding that 

California Doesn't Fund the Priorities for 

a Balanced Transportation System 20 

Caltrans ' Bias toward Highways 21 

Questions by SENATOR AYALA re: 

Location of Golden State University 22 

Motion to Confirm 22 

Committee Action 2 3 

Termination of Proceedings 23 

Certificate of Reporter 24 



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P-R-O-C-E-E-D-I-N-G-S 
— OoOoo — 

CHAIRMAN ROBERTI: Albert Aramburu, Director of the 
California Conservation Corps. 

MR. ARAMBURU: Where would you like me? 

CHAIRMAN ROBERTI: Sit down, why don't you. 

We'll ask you what we ask all the Governor's 
appointees: why you feel you're qualified to assume this 
position? 

MR. ARAMBURU: Well first of all, Mr. Chairman, I 
think you have my biographical sketch before you, so I won't go 
into that. 

But there are three main areas, I think, that qualify 
me for this position. Number one, I was in management for 20 
years with the Bell system, including Pacific Telephone and Bell 
Laboratories. And in that capacity, I administered budgets, 
supervised personnel, set goals and objectives, and learned to 
work with the community. And it was in that capacity that I got 
involved in politics, going from starting a recycling depot, to 
parks and rec . , running for town council, board of supervisors. 

In 1981, I made quite a jump in my career going into 
politics full time at a substantial loss in salary that I think 
that you all can certainly appreciate. During my tenure on the 
board of supervisors, I served on the Bay Conservation and 
Development Commission. I had the longest tenure of 16 years on 
that, and also the Bay Area Air Quality Management District. 
I've assumed positions of leadership on those boards, and I say 
that not out of a sense of aggrandizement, but to illustrate my 



1 commitment to public service. 

2 The second qualification is entrepreneurship. I 

3 started a company in Gilroy, California in 1986. It was a 

4 .! packaging company. We had over 200 employees at one time. But 

5 then, I've divested myself of any stock and hold no office with 

6 the firm since it subcontracts with the state. 

7 Also, I'd like to point out that entrepreneurship is 

8 something that the CCC is very much involved with these days . 

9 We ' re very proud to have reduced our dependence on the General 
Fund by $10 million over eight years, going from $36 to $26 
million; from 70% to 53%. That trend is going to continue out 

|| of necessity. We've worked out good working relationships with 

13 the federal, state, local governments, and the private sector. 

1 4 JAnd you're going to see more and more entrepreneurship. 

15 Now, it's not just the quantity of work I'm 
interested in with the CCC. I'm also interested in the quality, 
and we're adopting some total quality management rules in terms 



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18 of being able to assess our results, because if our sponsors are 



not happy with our work, then we're not going to be back. 



20 And finally, the third area I'd like to briefly cover 



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1 is my personal background and history, which suits me well, I 
think, for this assignment. I grew up in East Los Angeles 

23 speaking Spanish. My parents came from Mexico. And I just 

24 recently visited East L.A. It's as tough or tougher now than it 

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I had the good fortune to have a strong family; 
worked with the CIO, a Catholic youth organization, in sports. 
I had teachers that cared. Went in the Army and found out that 



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there are leaders and followers, and I came back determined to 
be a leader. After driving for the General Staff in Germany for 
2H years, I found there was quite a distinction between an 

4 enlisted man and an officer. 

5 So, I have always had a remarkable grasp of the 

6 obvious, which I think has been one of the keys of my success. 
1 [Laughter. ] 

8 MR. ARAMBURU: But you know, many of our Corps 

9 members don't have the same advantages, but the CCC does offer 

10 that. 

11 ! It's tough work. I was out this morning at a — what 

12 we used to call a dump, but now it's a solid waste management 

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13 i facility, where they're out there with these covers over their 

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14 face because it really is quite smelly out there. But we do the 

15 tough jobs, and it's good for the Corps. And of course, we 

16 provide not only work ethic, but educational opportunities, drug 

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17 ,j counseling, and vocational counseling. 
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18 In the Corps, everybody works hard, and that also 

1 9 !j includes the staff. 

20 So with that, I'd just like to summarize and say I'm 

21 | very glad to be here as the Director of the CCC. I look forward 

22 to making a bigger and better organization. 

23 ij I'll be glad to respond to questions. 

24 CHAIRMAN ROBERTI: Thank you, Mr. Aramburu. 

z:) Senator Ayala. 

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26 SENATOR AYALA: Yes, Mr. Aramburu. 

27 |i Being one of the authors of the bill that created the 

28 CCC, I think I knew pretty well what the role of the CCC was. 



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Can you give us your view of what the mission of the 
CCC is or should be? 

MR. ARAMBURU: Yes, I'd like to thank you again for 
making it a permanent organization, Senator. I certainly 
appreciated that. 

I'd just like to reiterate what's in the preamble to 
the legislation, that we're dedicated to developing youth and 
protecting the natural resources of the State of California. 

I think the number one is probably the most important 
element for me, because that's our most important resource, 
young people. 

Now, if one takes a look at the profile of our Corps 
members, they are not the ones destined necessarily to go on to 
college, not necessarily. There are some that will go to 
college, but many of these young people just want vocational 
skills, working for the Fire Service, Parks and Rec . , for 
Integrated Waste Management. They just want a good job and help 
with their education. 

Our job is to further that and to -- and frankly, 
there's a difference of opinion between national youth service 
concepts and the ones that we're espousing, because we have more 
of an orientation to, one, the work ethic. We have a one-year 
contract initially with a re-up provision. And secondly, we 
deal with the youngster who is, oh, on the lower side of the 
socioeconomic spectrum. So again, we are absolutely committed 
to helping develop our human young resource. 

And the other is the preservation of the environment. 
Most of our work is done in settings where conservation is 






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involved, and as we like to say, it's our middle name. So, we 

, just need to get even better at what we're doing. So generally, 

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that's it, Senator. 

SENATOR AYALA: You generally touched the mission of 
the CCC. You mentioned earlier entrepreneurship. 

MR. ARAMBURU: Right. 

SENATOR AYALA: That's a new one to me. I have no 
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\ problem with it, but how does it fit into the program? 

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MR. ARAMBURU: Well, in the past we had as much as 

$36 or $37 million out of the General Fund, and we're down to 

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about $26 million. And the reason we've been able to continue 
to exist at roughly the same size — we're down about 400 from 
our top population; we're down around 1700 Corps members — 
we've done this through going out and seeking contracts with 
I Fish and Game to build fish ladders, to work with Integrated 

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| Waste Management at solid waste sites, to work with cities and 
| counties in terms of landscaping. We have over 100 Corps 

members in South Central Los Angeles that are doing work out at 

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Inglewood and South Central L.A. So, we're seeking contracts 
with other governmental agencies at every level, and we know we 
have to . 

And as a matter of fact, this month in June, we will 

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be paying our payroll just through those contract 

reimbursements. So, we have to collect on those. We're getting 

into the accounts receivable business to continue to succeed. 

So, we're going out and seeking these contracts at 

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; every level of government, being able to provide them with a 
cost benefit arrangement. 



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SENATOR AYALA: Was the CCC involved in the coverage 
of the area that was destroyed by the riots here a couple years 
ago? 

MR. ARAMBURU: Yes, Senator, they were in South 
Central L.A. and Watts. And in fact, that contingent continues 
to today. We do graffiti removal. We do restoration of the 
plant life that was destroyed and so forth. We actually are 
doing work sort of new to us, in going into schools and 
educating on recycling, and some of the advantages of being in 
the CCC, and further outreach to that community. 

SENATOR AYALA: Is the Corps involved in the removal 
of graffiti, or anything like that, in our cities and counties? 

MR. ARAMBURU: We absolutely do graffiti removal, and 
it ' s tough sometimes because we have to work out a working 
arrangement with the gangs sometimes to do it. 

SENATOR AYALA: With the gangs? 

MR. ARAMBURU: With the gangs. 

SENATOR AYALA: You negotiate with the gangs? 

MR. ARAMBURU: Well, you know, we say, "Hey, we're 
just here to help out. You know, I mean, we're not here to 
trash you guys . " 

And we take great care not to wear bandannas that are 
blue or red also in that area because those are the gang colors. 
So, it's not necessarily a case of negotiation, but we're just, 
let's say, careful about how we do things. 

SENATOR AYALA: I remember reading an article where 
it said that most of the graffiti involved is not by gangs 
necessarily, but by kids who think it's cool to do something 



1 like that and get away with it. 

2 MR. ARAMBURU: Well, they're doing — they're called 

3 "taggers" now that have their own style, and they put it up 

4 there. But again, we find that many people in, like, schools 

5 say, "Hey, look, go do some tagging somewhere else, 'cause we've 

6 i got more paint than you do . " 

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graffiti, you have to just have a long-term view of it. Just 



9 keep painting over it. Don't let them get the jump on you. 



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SENATOR AYALA: Thank you. 

CHAIRMAN ROBERTI: Any further questions? Senator 

12 ii Craven. 

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13 SENATOR CRAVEN: I want to ask you a question about 

14 an installation in Southern California, San Diego County. Do 
•5 you still have something at Escondido? 

16 MR. ARAMBURU: No, we don't, Senator, but we do hope 

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17 to reopen that. We've been working with the Los Angeles City 

18 I and County for the Jobs Training Partnership Act, JTPA money, 

19 |: and some of that is held up with the stimulus package; some of 

20 it will be coming through. 

21 If we expand, which I hope to do in Southern 
California, we will be looking at it as one of the prime 

23 I locations to reopen Escondido. 
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24 SENATOR CRAVEN: How long has that been gone? 

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AD MR. ARAMBURU: Several years now. I'm not exactly 

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sure. 

SENATOR CRAVEN: It always seemed to me to be a 
delightful spot. It was not — it was far enough away from the 



1 urban core to be somewhat rustic, and it was close enough to the 

2 mountainous area where a lot of work has been done to make the 

3 trip not too long. At least, that's the way I looked at it. 

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4 MR. ARAMBURU: Since our last conversation, I went to 

5 meet with the Deputy Administrator of the County of San Diego, 

6 ]| who was very receptive to the idea. 

7 There have been some proposals to put in correctional 

8 facilities there, but they have not met with community approval, 

9 and our facilities normally are very well accepted by the 

10 ii community. 

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11 SENATOR CRAVEN: Well, many years ago, when we — 

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12 j "we" being the County of San Diego — had access to that 

13 || property, I put a methadone place in there. I believe they had 

14 j| a lot of problems that, too. If you think they have trouble 

15 [j with prisoners, believe me, we had a previous experience with 

16 the people who were the addicts. But it proved to be no problem 

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17 at all. The people were excited about it, as they quite 

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18 frequently are without knowing too much about what the operation 

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20 One other thing that you mentioned, and it's just a 

21 matter of information, and that is that you met with the gang 



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people, or what do you call the head of a gang, the gang leader? 



23 MR. ARAMBURU: Yes. 

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SENATOR CRAVEN: Okay. 



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Basically, are your troopers going to go in there 
and, in effect, erase what we attribute to the gangs, the 
graffiti? 

MR. ARAMBURU: We go erase it, period. We don't care 



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who put it there. We're — if a school district or someone — 
SENATOR CRAVEN: That's fine, I understand that, and 

ii that ' s why I want to ask the question. 

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Why do you bother to talk to those people? 
MR. ARAMBURU: Well, let me put it this way. If 
ii there ' s a threat of violence, and it looks like it's going to be 

a point where it's going to escalate, then our managers are 

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'instructed to pull back and then we'll come back. It never has 

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gotten to that point, and there 've been some casual contacts, 
"Hey, what are you doing to my graffiti," et cetera. But so 
far, we have not had any problems. 

But we have instructed our people, don't get into 
confrontations, you know. We'll just come back and do it at 
I some other time. But fortunately, we haven't had to do that. 

SENATOR CRAVEN: Well, I recognize the obvious, too, 
and that is that you know 100% more about it than I do, but I 
just wanted to get your idea on that. 

One other thing which was engendered by viewing a 
film on the CCC just within the last few days. Did you see the 
film? I'm sure you show it to your members. 

How many people check out after the original 
enlistment, if you will? Do you know what I'm referring to? In 
other words, they leave or they're told to leave, I guess, as 
the case may be. Percentage-wise. 

MR. ARAMBURU: Percentage — well, expressed another 
way, we've put about 50,000 Corps members in the 17 year history 
with the CCC. The average stay is about seven months. Some of 
it is a positive attrition because they get other jobs. Some of 



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1 jit's negative because they can't cut it, or there's a problem. 

2 SENATOR CRAVEN: Yes, that's really what I'm 

3 referring to. 

4 MR. ARAMBURU: And we want to — we want to expand 
that, and we've looked at our policies. We actually would like 

6 I to make it more than a one-year term, because when we train 

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young people for fire duty, which is very rigorous, it's 64 
8 hours plus other field time, the California Department of 

Forestry actually wants to hold on to them longer. So, for us 

ij to really get a pay back on our training, we're extending more 

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11 and more Corps members for at least a second year. 

12 SENATOR CRAVEN: Yes. 

13 Well, in this film they talk about one of these 

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14 fellows who was, I think, from East Los Angeles. He said he was 

15 ij a second timer, I think was the term used. 

16 Does that mean that he left because he couldn't meet 

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17 the requirements, then was given a second chance? 

18 MR. ARAMBURU: That's exactly it, Senator. 

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20 | the young person. They realize what they had, and we let them 

21 i come back for a second chance. 

22 SENATOR CRAVEN: Yes. Well, this man was a very good 
example. He did a very fine job. 

That's an excellent film. That should be shown to 
more people . I saw it on PBS here . 

MR. ARAMBURU: We'll try to. Thank you. 



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27 CHAIRMAN ROBERTI: Any other questions? 

28 ,! Is there any opposition in the audience? 



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1 Do I hear a motion? 

2 SENATOR CRAVEN: I would move. 

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3 CHAIRMAN ROBERT I : Senator Craven moves the 

4 confirmation of Albert Aramburu be recommended to the Floor. 

5 Secretary will call the roll. 

6 SECRETARY WEBB: Senator Ayala. 

7 SENATOR AYALA: Aye. 

8 SECRETARY WEBB: Ayala Aye. Senator Beverly. 

9 SENATOR BEVERLY: Aye. 

10 SECRETARY WEBB: Beverly Aye. Senator Petris . 

11 SENATOR PETRIS: Aye. 
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12 SECRETARY WEBB: Petris Aye. Senator Craven. 

13 SENATOR CRAVEN: Aye. 

14 SECRETARY WEBB: Craven Aye. Senator Roberti. 

15 CHAIRMAN ROBERTI: Aye. 

16 The vote is five to zero; confirmation is recommended 

17 to the Floor. 

18 j Congratulations. 

19 MR. ARAMBURU: Thank you very much, Mr. Chairman, 
Senators . 

CHAIRMAN ROBERTI: The next appointment is that of 



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22 || Robert A. Wolf, Member of the California Transportation 



I Commission. Senator Presley is here to introduce Mr. Wolf. 

SENATOR PRESLEY: Mr. Chairman and Members, thank 
you. 

I am here to introduce Mr. Wolf as a long-time friend 
and constituent of mine. He's a fine citizen of this state. 
He's a successful businessman. 



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He has served on the City Planning Commission and the 
County Planning Commission; been involved in a number of other 
enterprises around the community that are very productive. 

So, without reservation, I would recommend Mr. Wolf 
to you. I think he'll do an outstanding job on the Commission, 
and he looks forward to it. I'd urge your serious consideration 
of his confirmation. 

CHAIRMAN ROBERTI: Thank you, Senator Presley. 

Is there anyone here in opposition? 

SENATOR CRAVEN: Well, after looking at Mr. Wolf's 
resume, I think it would have been easier for Senator Presley 
merely to say those things that he's not involved with. I've 
never seen one with more activity in my life. 

CHAIRMAN ROBERTI: Does anybody have any questions? 

Mr. Wolf, we'll ask you what we ask all the 
Governor's appointees, and that is why you feel you're qualified 
to assume this position? 

Senator Craven's already spoken to your resume, 
however . 

MR. WOLF: Well, Mr. Chairman, thank you for the 
opportunity to be here today. 

And thank you to Senator Presley for the kind words 
in the introduction. 

In response to your question, Mr. Chairman, I think 
my resume does speak to the issue. My entire professional 
career has been dedicated not only to my own business, but to 
the economic advancement of my community and, by extension, the 
State of California, within the confines of the environment. 



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1 Those are two very important things to me . They have been the 

2 | bellwether by which I've worked, and I'm very proud of my 

3 accomplishments and wish to extend my string of service to the 

4 .California Transportation Commission. 

5 CHAIRMAN ROBERTI : Senator Craven. 

6 SENATOR CRAVEN: Mr. Wolf, are you still in the 

7 contracting business? 

8 MR. WOLF: Sir, I am a contractor in the State of 
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9 California, State of Arizona, State of Nevada, and the State of 

10 j Alaska. 

11 To answer your question fully, we don't build for 

12 ;i other persons. We build for our own account. We're in the 

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13 i medical professional office building business. 

14 SENATOR CRAVEN: Oh, I see. 

'5 MR. WOLF: So, contracting has the connotation that 

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16 we're out bidding work for others, and we're not in that 

17 , business . 

18 SENATOR CRAVEN: Well, the reason I mentioned that 
is, in times past we have had a man, who was a very good friend 
of mine, still is, who was in the tractor or heavy equipment 



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21 .business. And he served, I think, quite well, but he served 



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with some degree of controversy surrounding him because he was 
considered to have an association with the contracting business. 
In this instance, basically, we're talking about earth moving, 
roads, and things of that nature. 

That's the only reason I brought it up, because I was 
going to say do you think that this is going to create a problem 
where people may have the thought that there's conflict of 



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1 interest? Why don't you respond to that. 

2 MR. WOLF: Senator, Mr. Chairman, I'd be pleased to 

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3 respond to that . 

4 As you might imagine, Senator, when I was first 

5 II appointed to the City and then the County Planning Commission, 

6 J much the same concern was voiced. I'll let my record on both 

7 ! those bodies speak for itself. 

8 The fact of the matter is that my own basic principle 

9 is that perception is reality, and I have avoided with 
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10 zealousness the appearance of conflict, even if there is no 

11 ; conflict. 

12 It is in nobody's best interest to put the State of 

13 California nor myself personally in a position where that might 

14 become an issue. 

15 In preparation for serving on CTC, I reviewed any 

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16 | ! number of agendas from past meetings and have found nothing that 

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17 i would have had to abstain on. 

18 SENATOR CRAVEN: Well, it's just a point that came to 
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19 |! mind because I remember some degree of agony that this man went 

through, and it was unfortunate because I don't really -- in my 
judgment, there was nothing that he should have withdrawn from, 
but it was one of those things that there was a public thought 

23 (or a newspaper decided that we're going to ride herd on this for 

24 {j a while, and that's why I feel very strongly about it. 

CHAIRMAN ROBERTI: Senator Ayala. 
SENATOR AYALA: Mr. Wolf, what is your definition of 

a balanced transportation system? What does that mean? 
MR. WOLF: Senator, in three minutes or less. 



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1 Senator, it's become obvious to me that — that the 

2 transportation system as we know it is simply not a system of 
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3 'highways; that it very much is — a transportation system of 

4 tomorrow is a poly-modal system where rail is an integral part, 
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5 where highways are an integral part, where such diverse things 
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6 as telecommuting is a part of the transportation system when one 

7 looks at it from a holistic approach. 
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8 So, to sit here and to say what it is in the future? 
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9 j it ' s what it is not today, in that it's a balanced approach, 

10 [j using all the different attributes, all the modalities that are 

11 possible and available, and get, frankly, as much for the 

12 taxpaying dollar as possible. 



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SENATOR AYALA: Commuter trains and — 

MR. WOLF: Yes, very much so. 

SENATOR AYALA: — share the ride, and buses, and all 



those. 



MR. WOLF: They're all integral parts of a balanced 
system, transportation system. 

SENATOR AYALA: Not just freeways, in other words. 

MR. WOLF: Not just freeways. We could never do it. 

CHAIRMAN ROBERTI: Any other questions? Senator 
Petris . 

SENATOR PETRIS: Thank you. 

In that connection, I note the Little Hoover Report, 
published before you came on board in January of '92, is pretty 
critical and claims that there's a heavy pro-highway bias, and 
there's no plans at all for a balanced system. 

Since the initiative was defeated on the rail bond, 



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1 !; that sets people back even further who feel that part of the 

2 j! balance should be a rail system. 

3 Is there any activity now in your group to create a 

4 long-term plan with the balanced modes of transportation? Is 

5 | anything happening on that now? 

6 MR. WOLF: Sir, I think I can speak for all my 

7 colleagues on the CTC that they're advocates of a balanced 

8 approach to transportation, and a balanced approach includes 

9 rail. 

10 Sir, understanding that the CTC does not initiate 

11 projects, we are in reliance upon regions that put forth 

12 projects within their regions, and the CTC, as an honest broker, 

13 sorts them out and attempts to prioritize and provide funding. 
jj 

14 I think that there ' s a tremendous commitment on the 

15 part of my colleagues and the staff at CTC to rail. 

16 Sir, I brought with me some compilation of rail 

17 funding versus highway funding that took place through February 
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18 | this year. I'd be happy to share it with you, if you would like 

19 j to take the time. 

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20 SENATOR PETRIS: Sure. 

21 MR. WOLF: May I? 

22 CHAIRMAN ROBERTI : Please. 

23 MR. WOLF: Senator and Mr. Chairman, this is a 
compilation that went through February 26 of this year, and I'm 
sorry I don't have through current. But I think it will give 
you a sense of what's going on. 



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27 From 1993 to the date of this report, which was 



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February 26, $212 million in highway allocation, $246 million in 



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1 mass transit allocation. In the year 1992, a billion five 

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1 ! ninety in highway, billion one twenty-two million in mass 

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5 || transit. 1991, billion one twenty-one in highway allocation, 

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4 land fourteen million in mass transit. In 1990, 924 in highway, 
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5 ! l 84 in mass transit. 

b Senator, these are grand totals of three billion 

|l 

jj eight hundred forty-nine for highway allocation; two billion two 

I. 

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8 >! hundred sixty-seven million for mass transit. A difference of 

9 approximately $1.6 billion. 

10 In the scheme of things, as this was unwinding in 

11 I this report, is a gradual, a harmonic progression, if you will, 
after the blueprint legislation. I think that this shows a 
clear commitment on the part of the Transportation Commission to 
rail, and we — I believe I can speak again for my colleagues 
when I say that we welcome applications that apply fixed 
guideway transportation. 

SENATOR PETRIS: It seems to be a big jump from 1990 
i afterward. Maybe it was motivated in part in the later years by 
I the Little Hoover Commission Report. 

It just seems strange to me. You have the 

Commission, but it doesn't have authority to do anything; you 

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|| just coordinate locals, and maybe you can recommend to Caltrans . 

Do you ever do that, that they do certain things? 

MR. WOLF: Well, sir, I don't know that the 
Commission doesn't have any authority. 

As I understand it, the Commission has a clear 
charter to — if I can, Senator, just take a moment. And my 
understanding of it would be to divide the responsibility of the 



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Commission into a triad, into three different pieces: the first 
being a responsibility by statute to program a seven-year STIP; 
the second area of responsibility being to advise the 
Legislature and the Governor on transportation issues; and the 
third part of the triad, Senator, I would characterize as being 
an honest broker, and that is monitoring that which had been 
programmed and allocated before. 

SENATOR PETRIS: By the regions, by the state, or by 
whom? By everybody? 

MR. WOLF: I'm sorry? 

SENATOR PETRIS: Programmed by whom? 

MR. WOLF: The program — the transportation 
improvement plan that was programmed by the Transportation 
Commission. 

SENATOR PETRIS: What do you foresee for the coming 
year? In the figures you presented, are the figures going to be 
about the same? Is it getting closer and closer to an even 
balance? Is there going to be more rail than roads as we -- 

MR. WOLF: Sir, I can't speak to that right now. 
We're in the process now of getting a fund estimate from 
Caltrans which will be the basis by statute from which we 
program improvements forward. 

Preliminary numbers, as you might guess, are less 
than exhilarating on the amount of dollars that will be 
available. And until the actual fund estimate is clear, and 
we're able to ascertain whether or not we're programming against 
a real number or whether we'll be programming provisionally 
against some potential future revenue, sir, I'd be unable to 



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answer that question. I'd be in a far better position after 
we're clear from direction from the Legislature whether or not 
we will be programming provisionally for the out years. 

SENATOR PETRIS: Now, when you do programming, is 
this on a regional basis? Do you sit down with the regional 
people all over the state and coordinate your programming with 
them, or do you work with Cal trans? How do you go about doing 
this? 

MR. WOLF: Sir, I'm going to explain to you the 
system as I understand it, understanding I've been there for 
three meetings . 

But there are formulae by which counties obtain 
minimum amount of fundings, and there is a 60-40 north-south 
split in the State of California: the southern 13 counties 
receiving 60% of available funding, the northern 45 counties 
receiving the 40%. 

Using those formulae and any number of formulas 
within that as far as five-year programs and four-year programs, 
projects are nominated within regions, within districts, brought 
to and sort of coalesced by Caltrans, and brought to the 
Transportation Commission with specific recommendations. 

The Commission is then tasked with the 
responsibility to prioritize those lists within the confines of 
those formulae. 

I hope I answered your question, Senator. 

SENATOR PETRIS: Well, I think you have in part. 

I'm still looking for answers to the Hoover 
Commission recommendations, which says that the Legislature, 



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working with the Governor, ought to come up with directions to 
all the transportation agencies to have a long-term plan. We're 
supposed to have one in place — but they don't like it; it's 
not good enough -- and to make it cost effective. Specifically 
it says: 

"The state has not adopted an 
adequate long-term plan for the state 
transportation system, thus hindering the 
cost-effective development of a system 
that will improve future mobility. 

"The state does not adequately 
evaluate transportation alternatives based 
on cost-effectiveness, thus leading to 
unnecessary delay and expense . . . . " 
And in another portion it said that that ' s due to a couple of 
things . One of them is a lack of advocacy at the Governor ' s 
cabinet level for doing something like this, and I forget what 
the second one was . Probably it was lack of interest on the 
part of the Legislature; although, we have passed some bills. 

So, my question is, maybe you're not familiar since 
you've only been there a short time, you're not familiar with 
the Hoover Report and its recommendations . They seemed to be 
very sensible to me and echo what everybody says: we need a 
balanced system. But when we get down to the nitty-gritty, we 
don't seem to put up the money or the priorities that you talked 
about that are needed to come up with a balanced system. 

MR. WOLF: Senator, I can respond in part, and that 
is, prior to this meeting, I had the opportunity to visit with 



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the Planning Department of Caltrans, the actual agency tasked 
with the responsibility of preparing that particular report, and 
found them firmly entrenched in the midst of producing a 20-year 
program that addresses the issues to which you just spoke. 

Part of what I think is perhaps a misunderstanding, 
and I'm not clear on this, and again, I'll plead my newness to 
the Commission, but there has been a tremendous amount of what 
I ' 11 call consensus building being — having been done prior to 
this amongst many different areas of — competitive areas, I'll 
say, within the state to try to come together to try to build 
some consensus so that the platform from which a 20-year plan 
springs would have as its foundation, as its basis, some 
consensus before constantly going through this re-invention of a 
program that, without buy-in, will never be implemented. 

SENATOR PETRIS: Well, the other element in this is 
highway bias that the Hoover Commission perceives in Caltrans. 

Now historically, that's understandable. Caltrans 
originally was given the authority to build roads, not to build 
railroads, just vehicle roads; highways, I should say. 

But more and more, they've been taught to expand and 
go into rail, and they have done it. 

Well, does your review, limited as your time has 
been, lead you to conclude that we're finally on the right 
track? That's not intended as a pun. 

MR. WOLF: Well, Senator, in my small tenure on the 
Commission, I can share with you that there is a tremendous 
effort within the body of Caltrans, as I perceive it, to make 
the moves that you're talking about, to make sure that we're 



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addressing a poly, multi-modal approach to transportation. 

An agency the size of Caltrans, with 20-some-thousand 
employees, I'm sure that you'll agree, is similar to docking the 
Titanic . You push a little here, and push a little there, and 



push a little here, and eventually you get the ship where you 
want it . 

I see a lot of people and a lot of tug boats within 
the agency pushing real hard, from the Director on down, and 
it's clear to me that his direction has been that we will 
address it, and we will look at this as a multi-modal 
application of transportation. 

SENATOR PETRIS: Thank you. 

MR. WOLF: Thank you, sir. 

CHAIRMAN ROBERTI: Senator Ayala. 

SENATOR AYALA: One final question to Mr. Wolf. 

Allow me to surface my ignorance, but where is Golden 
State University? 

MR. WOLF: Golden State University is an extension 
school out of Los Angeles. San Marcos is the campus. 

SENATOR AYALA: At the State University at San 



Marcos? 



MR. WOLF: It's called the State University S.M. 

SENATOR AYALA: And this is an extension of that? 

MR. WOLF: An extension program. 

SENATOR AYALA: Thank you. 

CHAIRMAN ROBERTI: Are there any further questions? 

SENATOR AYALA: Move. 

CHAIRMAN ROBERTI: Senator Ayala moves confirmation 



23 



be recommended to the Floor. 

Secretary will call the roll. 
SECRETARY WEBB: Senator Ayala. 
SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris. 
SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 
CHAIRMAN ROBERTI: Aye. 

The vote is five to nothing; confirmation's 
3d to the Floor. 
Congratulations . 
MR. WOLF: Thank you, Mr. Chairman. Thank you, 



18 [Thereupon this portion of the 

19 Senate Rules Committee hearing 

li 

20 was terminated at approximately 

21 2:50 P.M. ] 

22 — ooOoo — 

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CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

jj IN WITNESS WHEREOF, I have hereunto set my hand 



this 



Mi 



day of June, 1993. 




0, y W 



Shorthand 'Reporter 



m 
'Re 






1 



231 -R 

Additional copies of this publication may be purchased for $5.00 per copy 
plus 7.75% California sales tax. 

Senate Publications 

11 00 J Street, Room B- 15 

Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 231-R when ordering. 



/ 






^ HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




DOCUMENTS DEPT. 

UN 2 4 1993 



PUBLIC LIBRARY 



STATE CAPITOL 

ROOM 113 

SACRAMENTO : CALIFORNIA 

WEDNESDAY, JUNE 16, 1993 
2:05 P.M. 



232-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, JUNE 16, 1993 
2:05 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



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APPEARANCES 
MEMBERS PRESENT 
SENATOR DAVID ROBERTI, Chair 
SENATOR WILLIAM CRAVEN, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR ROBERT BEVERLY 
SENATOR NICHOLAS PETRIS 

STAFF PRESENT 

CLIFF BERG, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

CAROL J. BENTLEY, Member 
Board of Prison Terms 

PAUL W. COMISKEY, Esq. 
Prisoners Rights Union 



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INDEX 



Page 



Proceedings 1 

Governor ' s Appointees : 

CAROL J. BENTLEY, Member 

Board of Prison Terms 1 

Background and Experience 1 

Witness in Opposition t 

PAUL W. COMISKEY, Esq. 

Prisoners Rights Union 2 

Board not Giving Parole Dates to 

Eligible Prisoners 2 

Board Pushing for Five-year Setoff 3 

Review Process Shrouded in Secrecy 4 

Prisoners Need to Expect Fairness from 

Board 5 

Response by MS. BENTLEY 6 

Motion to Confirm 6 

Committee Action 7 

Termination of Proceedings 7 

Certificate of Reporter 8 



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P-R-O-C-E-E-D-I-N-G-S 
— ooOoo — 

CHAIRMAN ROBERTI: I see Assemblywoman Bentley is 
here, so why don't we take you up rather than go through all 
these references. 

I should mention also that Mr. Rousselot for Board of 
Prison Terms is off calendar, will be re-scheduled for the 30th 
of this month. 

MS. BENTLEY: Thank you, Senator. 

CHAIRMAN ROBERTI: We know you well, but we'll ask 
you what we ask everyone: why you feel you're qualified to 
assume this position? 

MS. BENTLEY: Surely. 

I, as you may know, went to work for the State Senate 
in 1972 for then-Senator Jack Shrade, and continued to work with 
Senator Jim Ellis until 1988, when I was elected. 

So, I have a long history of our — changes in our 
criminal justice system, seeing the changes from determinate to 
indeterminate, the death penalty in and out, the response of the 
Legislature to the public's feeling that we need to have longer 
prison sentences . 

Then, when I was elected to the Legislature in 1988, 
I focused my legislation on criminal justice. I served four 
years on the Public Safety Committee. I was appointed Vice 
Chair of the Assembly Judiciary Committee. So, although not an 
attorney, most of my legislation and work in the Legislature 
focused in this area. 

I carried legislation concerning victims' rights, and 






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legislation that required the Department of Corrections to 
withhold good time for those inmates that weren't participating 
in drug and alcohol programs if they had that kind of a problem, 
so, in addition to other legislation that I carried in the area 
in increasing penalties. 

CHAIRMAN ROBERTI: Thank you very much. 

Are there any questions of Ms . Bentley? 

Is there any opposition in the audience? Please come 
forward. 

MR. COMISKEY: Good afternoon. My name is Paul 
Comiskey. I am the Director of the Prisoners Rights Union. 

I have come to know Ms . Bentley in the period of time 
that she's talked about in her service on the Public Safety 
Committee. I've always found her to be a fair, reasonable, 
compassionate person, and a thoughtful person in terms of the 
things that she ' s tried to do regarding prisoners . 

The obvious question you would ask is: why, then, 
would I oppose her confirmation? 

The reason I oppose her confirmation is that I 
believe that under Governor Wilson, that a mandate has gone out 
to members of the Board of Prison Terms not to give anyone a 
parole date. The parole board is now called the nonparole 
board. 

The Governor was given the authority in 1989, with an 
initiative that was passed, to take away parole dates from 
prisoners. I believe that he's taken a very large number of 
parole dates, and I don't think in the ]ast two or three years 
any prisoner has received a parole date from the parole board. 



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The parole board is very heavily right now pushing 
legislation that would permit them to give prisoners a five-year 
setoff, which means that they can tell him — right now the 
existing law is that if they don't reasonably believe that a 
person would be eligible for parole or suitable for parole 
within one year, they can say, "Come back in two years." Or, if 
that person's been convicted of multiple homicides, they can 
tell him to come back in three years. They're very much pushing 
right now legislation to give people setoffs of five years. 

The parole board becomes kind of a sinecure for 
people. It ' s a rather useless appendage if they go to hearings 
day after day and simply deny everybody who comes before them a 
parole date, and then use the authority they have to set people 
off for longer and longer periods of time. 

Over — I have been with the parole board since the 
beginning. Since 1975, I've been very, very active in prisoner 
legislation and litigation. I've sued 18 counties. I've 
represented hundreds of prisoners, both before the parole board 
in hearings , in writs , and many other ways . 

I ' ve gone to the meetings of the parole board over a 
long period of time, and right now there's less interest on the 
parole board than I've ever seen. I used to go there, and they 
would have very spirited discussions about whether a 
psychological program at a prison was really serving its 
purpose to give them the right information they needed to decide 
whether somebody would be a good candidate for parole, things 
like that. 

Now they talk about how to run the machines, the 



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recording machines. They talk about the scheduling so they can 
get away earlier on Friday, things like that. 

I really think I do not have anything against Ms. 
Bentley personally, but I think that a position on the parole 
board has basically become a job where the person is given the 
mandate by the Governor to simply, "Let's have zero risk. Let's 
not give anybody a parole date; we'll keep the victim rights 
groups happy. We won't risk somebody going out and doing 
something that will cause us a lot of embarrassment." And I 
think that's what is happening right now. 

So, I think that rather than simply rubber-stamp 
people who come before this Committee and allow them to sit on 
this board, and allow them to collect big salaries, and allow 
them to accrue more pension funds, allow them to collect per 
diems , that someone should say, "Hey, let's take a look at 
this . " 

If the parole board is not going to give anybody a 
parole date, why don't we simply abolish it, and we could have 
people recommended for parole by the classification staff of the 
prison, or somebody like that, because the Governor is 
ultimately the person who decides whether somebody gets out or 
not. 

That process itself is shrouded in secrecy. I've 
made a number of attempts through the Governor's legal secretary 
to find out what the process is of how they review when people 
are denied or granted a parole date, and I've been told a number 
of times simply to get lost. No information whatsoever has been 
given about that process . 



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So, I think that it's time for us to take a look. 
This is — I think it's very important for people inside the 
prisons to go to the parole board and to expect fairness, and to 
expect that the law will be applied. And that if they have not 
behaved themselves in prison, they've not engaged in the kind of 
rehabilitation that they should engage in, then they should 
expect to be denied a parole date. If they don't come there 
with the kind of psychological suitability for getting a parole 
date, they should not expect a parole date. 

But if they have done the best they can, and they've 
spent many, many long years in prison, and they've — as well as 
they can they've rehabilitated themselves, then they ought to 
get a parole date. People ought to have some sort of hope and 
expectation when they go to that parole board that they will be 
treated fairly. 

In recent — the last couple of years, I've basically 
as a lawyer told people, "Look, don't hire me right now to 
represent you before the parole board because you ' 11 be wasting 
your money. And I really have an ethical problem with 
representing you before the parole board, because I don't think 
you're going to be treated fairly." 

So, I think that with the appointments that the 
Governor has recently made that there ' s been a very definite 
change in attitude and practice on the parole board. The people 
that are leaving now, Ms. O'Connell and Mr. Tong, were people 
who I thought were fair. I'm very sorry to see them leaving, 
and I think that the trend that we see is simply going to 
continue. 



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Thank you. 

CHAIRMAN ROBERTI: Thank you very much. 

Ms. Bentley, on the issue of no parole dates being 



given 



MS. BENTLEY: Yes. 

I'd just like to point out that that is some 
misinformation. First of all, Ms. O'Connell is still on the 
Board of Prison Terms. 

And we do give parole dates . There is no mandate to 
us not to give parole dates . And I have given parole dates . 

And we look at exactly what ■ s been outlined to you 
that we should look at when we give a parole date . We look at 
the psychological reports . We look at what the prisoner has 
done while he's been in the institution. We look at his parole 
plans: does he have a job and support out there in the 
community. Because yes, there are prisoners that should be 
given parole dates , and we ' re doing it . 

There are also those that should not be given parole 
dates, and we're not giving to those. 

CHAIRMAN ROBERTI: Any other questions of Ms. 
Bentley? Is there anyone else in the audience who wishes to 
testify? 

Do I hear a motion? 

SENATOR CRAVEN: Move. 

CHAIRMAN ROBERTI : Senator Craven moves that 
confirmation be recommended to the Floor. 

Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala. 



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SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 
SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 
CHAIRMAN ROBERTI: Aye. 

The vote is five to zero; confirmation is recommended 
to the Floor. 

Congratulations . 

MS. BENTLEY: Thank you. 

[Thereupon this portion of the 

Senate Rules Committee hearing 

was terminated at approximately 

2:40 P.M. ] 

— ooOoo — 



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CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

*, IN WITNESS WHEREOF, I have hereunto set my hand 
this / / day of June, 1993. 



S^-j-^a/ 



Evelyn rf. m^ak J 
lorthand Reporter 



232-R 

A:di'.ional copies of this publication may be purchased *or $3.50 per copy 
p!uf> 7.75% California sales tax. 

Senate Publications 
1100 J Street, Room B-15 
Sacramsr.to, CA95814 

Make checks payable tc SENATE RULES COMMITTEE. 
Please include Senate Publication Number 232-R when ordering. 



HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



DOCMME* EPT. 



Jul 






ilAflY 



WEDNESDAY, JUNE 23, 1993 
2:45 P.M. 



233-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, JUNE 23, 1993 
2:45 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 
MEMBERS PRESENT 
SENATOR DAVID ROBERTI, Chair 
SENATOR WILLIAM CRAVEN, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR ROBERT BEVERLY 
SENATOR NICHOLAS PETRIS 



STAFF PRESENT 
CLIFF BERG, Executive Officer 
PAT WEBB, Committee Secretary 
RICK ROLLENS, Consultant on Bill Referrals 
NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

THOMAS S. SAYLES, Secretary 

Business, Transportation and Housing Agency 

AARON READ 

California Association of Highway Patrolmen 

TIM EG AN 

L.A. County Transportation Authority 

Escrow Institute of California 

JULIE M. WRIGHT, Secretary 
Trade and Commerce Agency 



Ill 

INDEX 

Page 
Proceedings 1 

Governor ' s Appointees : 



THOMAS S. SAYLES, Secretary 

Business, Transportation and Housing Agency 1 

Background and Experience 1 

Questions by SENATOR PETRIS re: 

CAL-VET Loans in Very Low Income 

Category 2 

Questions by SENATOR AYALA re: 

Need for Raising Gasoline Tax 3 

Reason for Transportation Funding Shortfall . . 4 

Opinion on Counties Raising Sales Tax for 
Transportation Needs 4 

Witnesses in Support: 

AARON READ 

California Association of Highway Patrolmen 5 

TIM EGAN 

L.A. County Metropolitan Transportation Authority 

Escrow Institute of California 5 

Questions by SENATOR PETRIS re: 

Cutting of Revenue-Producing Jobs on ABC .... 7 

Amount of Revenue Lost 7 

Inability to File Applications 8 

Motion to Confirm 8 

Committee Action 9 

JULIE M. WRIGHT, Secretary 

Trade and Commerce Agency 9 

Background and Experience 9 



IV 



INDEX (Continued) 

Questions by SENATOR CRAVEN re: 

Administration's Reticence in 

Appointing Directors in Other Countries .... 11 

Questions by SENATOR PETRIS re: 

Timetable for Appointing Director of 

Office in Japan 12 

Ability to Increase Exports to Japan 13 

Questions by SENATOR AYALA re: 

California's Public Policies Contribution 

to State's Economic Problems 14 

Appropriate Role of Government in 

Economic Development 15 

Reasons California is Losing Businesses .... 17 

Closure of Defense Plants Contributive to 
California's High Unemployment 18 

Questions by SENATOR PETRIS re: 

Conflicting Reports on Business Flight 

from California 19 

Agency's Ability to Keep Track of Which 

Companies Have Left and Reasons 19 

Proposed Leggo Family Park 21 

Site in Virginia 21 

Questions by SENATOR CRAVEN re: 

Denmark Trip 23 

Motion to Confirm 25 

Committee Action 25 

Termination of Proceedings 25 

Certificate of Reporter 26 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN ROBERTI: We have the appointment of Thomas 
Sayles, Secretary of the Business, Transportation and Housing 
Agency. 

Mr. Sayles, please come forward. Sorry we had you 
wait a little bit here. 

Senator Craven, you get to assume the Chair. I have 
to return a phone call. I hope to be back. 

Mr. Sayles, we'll ask you what we ask all the 
Governor's appointees, and that is why you feel you're qualified 
to be in this position? 

MR. SAYLES: Good afternoon, Mr. Chairman and Members 
of the Committee. It's a pleasure to be here. 

I come here, quite simply, seeking your support. I 
believe by professional background and training, I am capable to 
do this job. 

I have been serving in this position for the last 
three months. I've found it to be enormously challenging, and I 
very much would like an opportunity to continue to work with the 
Governor, the Legislature, my friend and colleague Julie Wright 
who is the Secretary designate for Trade and Commerce, to help 
improve the California economy and, indeed, to improve the 
quality of life for all Calif ornians . 

And with that brief statement, I would simply urge 
your support . 

SENATOR CRAVEN: Thank you very much, sir. 

Does any Member of the Committee wish to ask the 



nominee some questions? 

SENATOR PETRIS: Yes, if I may. 

SENATOR CRAVEN: Senator Petris . 

SENATOR PETRIS: The CAL-VET folks come under 
jurisdiction; don't they? 

MR. SAYLES: Under HCD. 

SENATOR PETRIS: Yes. I have a report from that 
department dated May 3rd, from Mr. Pride, Chief of the Division 
of Farm and Home Purchases . And looking over the report of the 
types of loans and the borrowers, there's one line here that 
kind of struck me and aroused my curiosity. That is, the number 
of loans and the percentage of total loans, and they're 
categorized according to the income level of the borrowers . 
Lower income, very low income are the only two on here. And the 
percentage of the total loans in 1992 for very low income was 5, 
and for lower income was 29.5. So, the total was about a third, 
a little over a third, for those two categories. 

I ' m wondering why it ' s so low for the very low 
income? Is it because there's only a few veterans in the very 
low income category, or they just don't feel confident in 
extending the loan to them? 

I know there are provisions in the Code which require 
special attention to that in extending the installments, and it 
Code gives the department some pretty good leeway in helping 
those in the lowest income category. 

Now, this is pretty remote from your overall stuff, 
and you may not be in touch at all . 

MR. SAYLES: I apologize. That is not something 



that's come to my attention. I, of course, will be glad to look 
into that. 

SENATOR PETRIS: Yes, I would appreciate it if you 
would. 

I've raised these questions all across the board for 
all our policy housing lending agencies, and I would appreciate 
getting the information. If I had received the report earlier, 
I would have called you and talked about it. 

There's a section I just want to cite, one section in 
the Code, if I could find it. Well, I don't seem to have it 
here, so I won't take up any more time, but it has to do with 
authorization to do certain things to facilitate the loans to 
people in the lowest income level . 

Anyway, if you could check that out and get back to 
me, I would appreciate it. 

MR. SAYLES: I'd be glad to, Senator. 

SENATOR CRAVEN: Ruben, before we go to the audience? 

SENATOR AYALA: I wanted to ask Mr. Sayles, do you 
think we need to raise gasoline tax any further to adequately 
maintain our roads and highways in California? Do you think the 
only solution is to raise gasoline tax? 

MR. SAYLES: No, I don't think so. I think that's -- 
obviously, we're looking at the overall how we finance 
transportation here in the state, and I've spent, I would say, a 
disproportionate amount of my time looking at just that issue 
right now. 

But I would say it's premature for us to take the 
view that a tax increase is necessary at this point in time. 



SENATOR AYALA: We have more automobiles in 
California than ever before. Obviously, they're all buying gas. 
Why is it that we're always short of funds, transportation-wise? 

MR. SAYLES: Well, there's several reasons. First of 
all, even though there are more automobiles, because of the 
recession less people are driving. We've lost about $600 
million in that regard. 

Secondly, our STIP has not been fully funded. Most 
of our federal dollars are down. So, there are financing issues 
we have to deal with. 

But I don't think at this point it necessitates a tax 
increase. 

SENATOR AYALA: Some counties have come forth with 
their own sales tax — half a cent, for instance — for the 
purpose of transportation needs. 

Do you think all counties should be able to do that 
in order to maintain their town local streets and so forth? 

MR. SAYLES: Well, I think all counties are in a 
position to do that. It's a question of whether or not they 
elect to do it. 

And what you will find, though, Senator — I serve as 
an ex officio member of the MTA, which is the Transportation 
Authority in L.A. County, and their sales tax revenues are off; 
their projections are off also. 

So, this issue of how we finance transportation is 
one that I think we all have to take a hard look at. 

SENATOR AYALA: The counties get allocations from 
gasoline tax. If they pass their own sales tax, like in San 



Bernardino and Riverside, that is not counted as part of the 
apportion they get. 

MR. SAYLES: Yes, that's not part — 

SENATOR AYALA: That's over and above. 

MR. SAYLES: That's over and above. That's separate 
local revenue. 

SENATOR AYALA: Thank you. 

SENATOR CRAVEN: Is there anyone in the audience who 
would like to speak in favor of the nominee? 

MR. READ: Thank you very much, Mr. Chairman and 
Members. Aaron Read, representing the California Association of 
Highway Patrolmen. 

It is our distinct pleasure to be here in support of 
Secretary Sayles . And our President, Mr. Gordon Koolman, who is 
a CHP officer himself, would have been here in person, but he is 
recovering from major surgery. 

So, it ' s my pleasure to express to you their very 
strong support of Secretary Sayles. 

In just a matter of a few months, he has brought a 
new spirit of cooperation and a new spirit of energy to the 
Agency and to the CHP, which is a major department under his 
jurisdiction. We're indeed proud to work with him, and I know 
we look forward to the years ahead. 

And so, for whatever we can say, we want to urge his 
confirmation. 

Thank you. 

SENATOR CRAVEN: Thank you, Mr. Read. 

MR. EGAN: Thank you, Mr. Chairman. I'm Tim Egan. 



I'm representing two clients. The first one is the L.A. County 
Metropolitan Transportation Authority, which Secretary Sayles 
has already indicated he serves with distinction as an ex 
officio member. 

This is the first time — I'll recall this to the 
Committee — this is the first time that we've had a gentleman 
in his position, I guess, more or less volunteer to serve as an 
ex officio member on a very, very rugged local transportation 
group. And I think this shows a good desire on the Secretary's 
part to build that state and local partnership, which, Senator 
Ayala, we feel is very, very important to move the 
transportation projects that we have before us. 

The second client I'd like to point out that strongly 
supports the Secretary's nomination and confirmation is the 
Escrow Institute of California. In Mr. Sayles' previous 
position as the Commissioner of Corporations, he was our 
regulator. This association is the 1100 licensed escrow 
companies, and I believe they were the largest body, if not the 
most difficult body, to regulate as the Commissioner of 
Corporations. And in that position, we found Mr. Sayles to be a 
fair and honest regulator, and a gentleman who had a very soft, 
if not diligent, spot in his heart for small minority-owned 
businesses, which are these escrow companies. 

And both my clients strongly encourage the 
confirmation of Mr. Sayles as the Secretary. 

Thank you. 

SENATOR CRAVEN: Thank you very much. 

Anyone else wish to speak in favor? Anyone opposed? 



There appears to be none. 

Any other questions? Senator Petris . 

SENATOR PETRIS: I have a question on the ABC. They 
got a lot of complaints when the horrible, enormous cutting of 
revenue-producing jobs was made, even from people who were being 
regulated. They thought it was for the good of the industry to 
keep those people there and monitor the bad guys . 

Have you any figures on what, if any, revenue loss 
has resulted from the loss in that personnel? 

MR. SAYLES: I think we can get those figures for 
you. I can tell you, though, Senator that — 

SENATOR PETRIS: Has there been a loss? Do you know 
whether there ' s been a loss or not? 

MR. SAYLES: I don't know off-hand, but I can tell 
you it is one of the things that we're in the process of fixing. 

One of the things that you will — by December, we'll 
be in a position where all routine applications will be 
processed in 30 days, and the more complex ones around 45 days. 
And we're also adding staff so we can process these applications 
in a more timely basis. 

The staff is, we had moved the enforcement staff out 
of enforcement, and they were in a position where they were 
trying to process license applications. They were going, quite 
frankly, too slowly. 

We have now — we are increasing the number of 
license processors now, and so we're moving those applications 
out in a more timely fashion. 

I can get you numbers, though, on whatever the -- on 



8 

what, if any, revenue was lost over the last year. 

SENATOR PETRIS: Yes, I'd be interested. It got so 
bad there for a while, I don't know how it is now, but an 
applicant would have to shop around a whole region to find an 
office that could take him by appointment in something less than 
30 or 60 days just to come in and file the original application 
and talk about it because of the shortage of inside help. 
That ' s over and above the enforcement cuts . 

MR. SAYLES: If I may, on that point, we have fixed 
that problem. 

SENATOR PETRIS: That's been fixed. 

MR. SAYLES: That has been fixed. You can now come 
in and get an appointment. 

SENATOR PETRIS: Thank you. 

SENATOR CRAVEN: Senator Beverly. 

SENATOR BEVERLY: Move the Committee recommend 
confirmation. 

SENATOR CRAVEN: Senator Beverly has moved. No 
further comment, call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 



Four to zero. 

SENATOR CRAVEN: Four to zero; recommended to the 



Floor. 



Congratulations . 

MR. SAYLES: Thank you very much. 

SENATOR CRAVEN: Next is Julie M. Wright, Secretary 
of Trade and Commerce Agency. 

We'll ask you as we ask all of the nominees to tell 
us why you feel you are appropriate for this job, or qualified 
as well. 

MS. WRIGHT: Thank you very much, Senator Craven. 

Let me first appreciate expression for the creation 
of the Trade and Commerce Agency with bipartisan support. As 
you know, the Council on California Competitiveness established 
by the Governor, as well as the Assembly Democratic Economic 
Prosperity Team, both recognized the need to have a cohesive and 
focused economic development program for California to respond 
to the many challenges that are facing our state. 

I guess if I could speak just a moment about why I am 
qualified, I think the two primary roles of this Agency are to 
be involved in the public policy arena on issues that affect 
business and the business climate in California, and also to be 
a strong and focused marketing organization. 

One of the most significant achievements we've made 
in this new, young Agency is the establishment of Team 
California, which is a network of economic development people 
all over the state. The vision that that speaks to really was 
borne out when California thought it might have an opportunity 



10 

to bid for the Mercedes-Benz manufacturing facility here in 
California. And with that network, which consists of 600 
people, we had 50 Red teams established, ready to submit a 
proposal to compete for that plant. Unfortunately, we 
subsequently learned that they would not consider a location 
west of the Mississippi because two-thirds of the production was 
going back to the European Continent, but that is a key part of 
the vision. 

And I guess the one other thing that I would like to 
note is that the Legislature plays a very important role in Team 
California. Senator Ayala was involved in the DEFAS 
competition, which incidentally is still open, and in defense 
conversion. Senator Beverly has been a very valuable player on 
the retention of the Los Angeles Air Force Base. Senator 
Roberti on the Fox Studios expansion in Los Angeles and other 
projects like that within the greater Los Angeles area. Senator 
Craven, certainly your ongoing support of the Leggo Family Park 
in Carlsbad, and Senator Petris, for your strong support on 
trade and investment issues and most particularly in our 
dealings with Japan. 

And so, this is an approach and an organization that 
really depends on collaboration, and I think we've made some 
substantial progress. I guess that's one of the primary reasons 
that I feel qualified for this job. 

SENATOR CRAVEN: Very well. 

Is there anyone here who's like to speak in favor of 
this appointment? Anyone who wants to voice any objection? 
Well, there appears to be none. 



11 

I've got a question I'm going to ask you. I've got 
in part an answer already. 

Why is the Administration somewhat reticent to 
appoint to positions already existent in other countries, you 
know, a director? Can you answer that for me? 

MS. WRIGHT: I ' d be very happy to answer. 

I can speak to the time since the formation of this 
Agency. And since it has been formed, which is about five-and- 
a-half months ago, we have conducted a thorough review of the 
overseas offices. We have established marketing plans for each 
office. We established accounting systems so that their 
functions could be merged into that of this Agency, and we've 
created an operations manual. 

We've also done more than two dozen interviews 
relative to hiring for the overseas offices, and yesterday 
announced the appointment of an individual to head the Mexico 
City office, a business person from Los Angeles who has been 
involved in trade for quite some time. 

We are about to announce an appointment in the 
Frankfurt office, and now that the budget issues have been 
resolved, I am hopeful we will move forward rather quickly on 
the Tokyo office. 

As you undoubtedly know, the Hong Kong office has 
been staffed by an economic development professional for some 
time. 

SENATOR CRAVEN: Nancy Michel just gave me this 
release dealing with the Governor's appointing Reinhold C. 
Shrader, and that's the gentleman to whom you referred, I 



12 

presume, for the Mexico City operation. We're happy to see 
that. 

MS. WRIGHT: Yes. 

SENATOR CRAVEN: Does Senator Petris have a question? 

SENATOR PETRIS: Yes. 

How close are we to getting somebody in Japan? 

MS. WRIGHT: Well, I don't know that I want to put a 
time table on it, but within several weeks. 

The concern is, of course, within Japan the staffing 
of a director costs more. I will tell you that since I have 
made one mission to Japan, and several of my staff have embarked 
on specific projects there, the Acting Director has done a very 
fine job. And while Japan is, obviously, a key priority, it 
gave us a little bit of freedom to staff the offices where the 
absence of a director was really critical. 

And so, we have embarked on the interview process in 
Japan, and I'm hopeful that we will conclude it very quickly. 

SENATOR PETRIS: Does that mean you're going to draw 
on someone who lives there now or is working there? 

MS. WRIGHT: I don't want to rule that out. It's 
obviously a cost effective way to go, and if we can identify the 
right candidate who is a U.S. national in country, that can be 
not only a very expedient way to go, but would mean that we were 
dealing with someone with some direct and recent experience. 

SENATOR PETRIS: Are you requiring knowledge of the 
language, knowledge of Japanese? 

MS. WRIGHT: Where ever possible, yes. 

SENATOR PETRIS: Do you know how we're doing through 



13 

that office? I know there are a lot of other people trying to 
increase our exports to Japan. 

MS. WRIGHT: Right. 

SENATOR PETRI S: Do you know, looking only at that 
portion that's attributable to our particular office in Tokyo, 
over the past couple of years have we been able to increase the 
exports through their efforts, through our representative over 
there? 

MS. WRIGHT: Every single one of our offices plays 
that role. The difficulty that we have is that we facilitate 
the business relationships. We often assist in taking 
companies to trade shows and bringing people through on trade 
missions. And that is with respect to both exports and foreign 
direct investment in California. And in both cases, of course, 
Japan is one of our leading trading and investment partners. 

I would have to research to attempt to give you 
specific numbers, because we don't in all cases know the outcome 
of having made that happen. 

SENATOR PETRIS: I hope we can get a good person in 
there. 

I've been over. I visited that office some years 
back, as well as the one in Hong Kong. There's a lot of work to 
be done there. 

MS. WRIGHT: Absolutely. You're right. 

SENATOR PETRIS: Thank you. 

MS. WRIGHT: Thank you. 

SENATOR CRAVEN: Senator Ayala. 

SENATOR AYALA: We hear so much about industry and 



14 

business leaving California these days. 

To what extent are the declining conditions in 
California — of course, they're the result of the national 
recession — but to what extent are public policies in 
California contributing in your opinion to our economic 
problems? 

MS. WRIGHT: Well, I don't mean to sound flip, but we 
have tried to get a handle on exactly what business flight means 
in California. There have been some studies conducted by both 
PG&E and Southern California Edison, who, of course, have a very 
important vested interest in business retention in California. 
And then we've had numerous studies conducted by both the DEPT 
and the Competitiveness Council, and several other groups, and 
then within my Agency, where we have kind of front-line business 
contact with people. 

I think these issues are critical. They typically 
involve three primary areas. One is workers' compensation. The 
second is permit streamlining, the length or the 
unpredictability of time to get permits, which to some degree my 
Agency has mitigated in some instances through the Red Team 
approach, but it's obviously not a sound long-term public policy 
solution. And third is taxation. And I will give you a brief 
example on the latter. 

As Senator Craven knows well, we are competing for 
the Leggo Family Park. One of the issues that they have raised 
is that in northern Virginia, which is our competition, they can 
only operate this park about five months a year. In California, 
it could be a year-around park. And believe me, we are selling 



15 

the assets of California. Virginia's corporate tax is 6%; ours 
is 9.3, and that's one of the key factors that, when they run 
their numbers out, has them tell us — and we are looking at 
them closely to see if we can refute them on any criteria — but 
they have told us that a five-month park in Virginia is 
approximately as profitable as a year-around park in California. 

So, those three issues come up repeatedly, and I 
think that without debating the areas of potential disagreement, 
that most of us have come to agreement that those are the three 
primary issues that affect our competitiveness as a state. 

SENATOR AYALA: What do you think is the appropriate 
role of government in economic development? How do we fit into 
that, to give incentives and promote, not only for existing 
industry to expand, but to attract new industry coming in to 
provide, obviously, more employment? 

MS. WRIGHT: The state obviously can't do it all. 
The state provides a very important umbrella, which is why we 
established Team California. And even in writing a competitive 
proposal for a business attraction or expansion, it's very 
important to have a local partnership. And each of us brings 
different things to the table. 

For example, transportation issues have come up on 
some of our proposals because, in fact, that infrastructure is 
often needed or required in order to allow for a business 
expansion. Those decisions are — are developed through the 
regional transportation planning process, and so the state 
really cannot appropriately come in and edict, but in 
partnership we can agree to the priority and work with the local 



16 

community to determine if they have an interest in amending 
their plan. 

As to being competitive, I guess my bottom line is 
that California needs to concentrate on being competitive at the 
bottom line. That does not mean item for item for item, because 
we do have some costs in California that there's not a whole lot 
we can do about, except that the recession has probably helped a 
bit. But aside from that, our companies in California are 
endeavoring to be globally competitive, and they themselves are 
restructuring in order to bring their costs into line to do 
that. 

So, I think we have to concentrate on two areas, and 
that is what costs State inflicts on business. If it's a 
cumbersome permitting process, that does cost money to a 
business. If it's workers' comp., which isn't even a budget 
issue, it's still a cost to a business. So, I think we have to 
pay particular attention to those areas. 

And then, secondarily, we need to assure that our 
other policies, whether they are incentives or tax policies, are 
— maintain a competitiveness with other states . 

As you know, the Speaker is carrying a manufacturing 
sales tax exemption, and the Governor identified money in the 
'94-95 budget and has made it a priority of his Administration, 
having identified the money. 

Let me just simply say by way of example that that is 
a competitiveness issue, because 42 other states either have a 
partial or full exemption from sales tax, or they don't have a 
sales tax. And so, for example, in the Intel expansion to build 



17 

a billion dollar wafer fabrication facility, what Intel has told 
us, and told us in our most recent competition, is that 
California inflicts an $80 million penalty. So that when they 
run out their numbers in a site selection decision, it is an 
issue that puts us at a competitive disadvantage. 

And there are a lot of ways to address these things, 
but those are the two major ways that I think that we do need to 
look at them. 

SENATOR AYALA: Well, we must be doing something 
wrong, because the recession is nationwide and beyond, and yet 
we keep reading, especially from the Chambers of Commerce, that 
we're losing because of our lack of aggressive determination on 
making it mfl|:e attractive for the people to stay here. And of 
course they "mention the workmen's comp. , and I agree with them 
on that score. 

But are we doing something else that we should be 
correcting that other states aren't doing? Why is it that we're 
losing supposedly all these people to other states when 
conditions should be similar everywhere we go? 

MS. WRIGHT: Let me say that I think there are three 
things that contribute to the job loss: certainly, the 
recession; secondarily, Defense budget cuts and base closures, 
which have just terribly disproportionately hit our state; and 
third are what we've been calling our self-inflicted wounds, and 
those are the things that we should concentrate on. 

The Chamber is a member of Team California. And in 
fact, when we conducted a business mission to New York in June 
to call on 50 corporate headquarters with operations in 



18 

California, in part to tell them the good things that were 
happening this year in the Legislature and in our own attitude 
and process for business attraction and retention, that's a team 
effort. And I think all of us need to work on what needs to be 
done to truly make California competitive, and then we all need 
to be positive about a terrific state. 

SENATOR AYALA: You mentioned the closure of defense 
plants have contributed to the problem, but the problem existed 
before we started to do that. It was happening during the time 
that the Cold War was still with us, and we needed all these 
defense plants throughout. Yes, it think it is contributive, 
but I don ' t think that ' s the main reason for the problems that 
exist in California, and we have a lot of unemployment because 
of that. 

MS. WRIGHT: The Defense budget's been flat in real 
financial terms since 1986, and a lot of defense companies have 
been diversifying. But it really took a dive beginning in about 
1991, and as a result, another thing that we are potentially 
suffering from is the necessary consolidations in that industry. 
So that, for example, when Hughes bought the General Dynamics 
missile business, they did it in part because they had a big, 
modern, under-utilized facility in Arizona. And so, the 
handwriting was on the wall. 

I think we — to some extent, we are just going to 
have to struggle through the re-creation of the 800,000 jobs 
we've lost, and the 300,000 jobs a year we need to create, but 
complement that with the broadest based aggressive marketing 
program that, within our limited resources, we can establish. 



19 

SENATOR AYALA: Thank you. 

SENATOR CRAVEN: Senator Petris . 

SENATOR PETRIS: I've been very confused by 
conflicting reports on the business flight. The Southern Cal . 
Edison report, as I recall, concluded that it was highly 
exaggerated. It seems to be a phantom out there. I don't know 
of any list that's reliable that's been published by the state 
or the State Chamber that lists all these companies. 

Now, we all know of examples of companies that have 
left in our own districts, but I haven't seen anything in the 
literature that verifies the enormous wholesale exodus that the 
L.A. Chamber, for example, claims has been going on for some 
time. Now, I guess I should have checked with the L.A. 
Chamber. Maybe they have a list. 

Does your Agency have a score card that keeps track 
so that we'll know which companies have left and for what 
reasons so that we can take corrective action and limit the 
flow? 

MS. WRIGHT: First, let me say I think that the 
Edison study identified quite a significant number of businesses 
that had left, but it wasn't a comprehensive sample. 

We looked at a variety of ways that we might be able 
to determine business flight: from Dunn and Bradstreet; change 
of address records, which would be very expensive to get and 
track; to Board of Equalization records, and other records that 
we might have at the state. And we have not been able to come 
up with a good, solid measure where I could sit here and tell 
you what I think is the base line. 



20 

I guess I take the attitude that, as I've tried to 
look at the business climate issues with the bottom line 
approach, and say if we do know that what is happening to 
California companies is costing more, then whether they're 
leaving the state or not, we have a competitiveness problem. 

Secondarily, it's one thing to pack up and move a 
plant and employees out of state, and it's quite another thing, 
as this economy turns and businesses have the opportunity to 
make what this industry calls "greenfield decisions" about where 
they're going to locate those expansions, so I guess although I 
think it would be ideal to have such a number, what I've 
concentrated on is where we know we ' re not competitive in the 
public policy arena, we need to strive to become competitive. 
And whether it's one business in four, as one of the Business 
Roundtable surveys said, or one in twenty, it ' s a problem that 
we should really work to respond to. 

I'm real sorry that I can't give you a more 
definitive answer on numbers. 

SENATOR PETRIS: Well, if you ever get a list, I'd 
love to see it. 

MS. WRIGHT: All right. 

SENATOR PETRIS: Maybe you can work through the local 
Chambers all over the state. A Chamber knows when a company 
leaves town. Some of the more vigorous ones, when they hear 
about the plans, try to dissuade them from leaving. 

MS. WRIGHT: Well actually, one of the things that 
we've tried to do is work with the utilities, because when 
utilities are shut off, it's usually a sign that something has 



21 

happened, or when the utility is transferred. 

But again, it is not a comprehensive list, and it's 
pretty labor-intensive to consider following through to 
determine the reason. 

SENATOR PETRIS: I'm curious about the Leggo Park. 
Is there one in Virginia now? 

MS. WRIGHT: No, this will be their first United 
States expansion of a family park. 

SENATOR PETRIS: There aren't any in the U.S. at this 
time? 

MS. WRIGHT: No. There's one in England that they 
are just now building, and this is their first U.S. expansion. 

SENATOR PETRIS: I'd sure like to know how they 
figure it could be more profitable in five months in one place 
than twelve months somewhere else, based on that corporate tax. 
There must be more to it than that. 

MS. WRIGHT: I'm sure there is more to it than that, 
and believe me, we are trying to sort it out so that we can 
potentially provide a challenge to their assumptions. 

SENATOR PETRIS: What part of Virginia are they 
looking at? 

MS. WRIGHT: Prince William County in northern 
Virginia, between 1-95 and Route 1, near Woodbridge. It's in 
the greater metropolitan area of Washington. 

SENATOR CRAVEN: It's within, what, 25 miles of 
Washington? 

SENATOR PETRIS: Yes, it ' d be close to Washington. 

MS. WRIGHT: Right. 



22 

SENATOR CRAVEN: Which can get cold as Alaska. 

[ Laughter . ] 

MS. WRIGHT: Actually, we're hoping they will dig up 
a few Civil War bones and find out they can't even build on the 
site. 

[Laughter. ] 

SENATOR CRAVEN: It gets very, very cold. 

SENATOR PETRIS: They must be projecting a huge 
number of people in those five months . 

MS. WRIGHT: Actually, they have looked at the 
demographics within 25 miles and 125 miles, the level of tourism 
that comes into Washington. We've done the same thing here in 
California. 

The numbers are roughly equivalent, except that as 
the range broadens, California does better. 

SENATOR PETRIS: Well, I would imagine we'd draw a 
lot more people when we've got seven months more than they have. 
It should be an enormous difference. 

That ' s why they didn ' t put Disneyland in Prince 
William County, you know. They might wind up going there, but 
as of now — 

SENATOR CRAVEN: Disneyland is a little further in; 
it's called Washington. 

[Laughter. ] 

MS. WRIGHT: Well, let me tell you, in fact, 
Disney has been helpful by providing us some of their marketing 
data on visitor demographics, in addition to the tourism studies 
we've conducted, because they don't view this park as a direct 



23 

competitor. 

So, these kinds of projects are collaborations, and 
they tend to be very instructive as to what the competitive 
issues are. 

And if you have good ideas that you'd like to 
contribute to this Leggo proposal process, I would welcome them. 

SENATOR PETRIS: Thank you. 

MS. WRIGHT: We want to win this one. 

Right, Senator? 

SENATOR CRAVEN: Yes, absolutely. It's been a very, 
very interesting thing. I guess Carlsbad has as much chance as 
the other site has. 

MS. WRIGHT: It's a much more beautiful site, I 
think. 

SENATOR PETRIS: Especially in the winter. 

SENATOR CRAVEN: I don't know the exact site. I'm 
quite familiar with Virginia, and also the weather there, 
because in the winter time, we used to jump into the Potomac 
River there to learn landing exercises, and in the summer time, 
they took us on what was called the Pipeline Trail, which was 
where the power lines were. They were up hills and down hills. 
And I'll tell you, it was excruciating. People would say, "Send 
me over seas. I've had enough of this." It was worse. 

Well, did you mention the fact that you had been to 
Denmark? 

MS. WRIGHT: Yes. 

The officials in Carlsbad and San Diego County and 
the San Diego Economic Development Corporation, which are all 



24 

part of the Team California partnership on this proposal — 
which, I should point out, is not being led by my Agency; 
strongly supported, but really being led by the City of 
Carlsbad, which is exactly the idea of Team California — and I 
did have occasion to spend 24 hours in Billen, Denmark and visit 
the park. And it is — it would be a great asset to California, 
I'm absolutely convinced. It has a strong educational component 
to it, and I think California would be very good for Leggo. 

I was raised in the Washington, D.C. area, so I, too, 
know the California advantages. 

SENATOR CRAVEN: She was also raised in the Tokyo 
area, having spent some time there. 

MS. WRIGHT: Right. 

SENATOR CRAVEN: So, she's had a very well rounded 
education. Certainly, I think, is very well qualified. 

Senator Beverly. 

SENATOR BEVERLY: There is an attraction to that 
five-month work year. 

[Laughter. ] 

SENATOR BEVERLY: Some people say we already have it. 
I don ' t know . 

MS. WRIGHT: It's not a twelve-month pay check, 
though. 

SENATOR BEVERLY: Well, for somebody it's just as 
profitable. 

But I'm pleased to note that both of these nominees 
today are graduates of TRW, one of our premier employers in the 
state. 



25 



I'm pleased to move we recommend confirmation. 
SENATOR CRAVEN: Very well. 

Any further discussion? There appears to be none. 
Call the roll, please. 

SECRETARY WEBB: Senator Ayala. 
SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 
SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 
SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 
Four to zero. 

SENATOR CRAVEN: The vote is four to zero; 
recommended to the Floor. 

Congratulations. Thank you. We're sorry to have 
kept you waiting so long. 

MS. WRIGHT: Not at all. Thank you very much. 
[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
4:25 P.M. ] 

— 00O00 — 



CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

j/ IN WITNESS WHEREOF, I have hereunto set my hand 



,is £v 



this O*- ( day of June, 1993. 




Ju^Jf. 



EVELYN^ J. JpZAK 
Shorthand 'Reported: 



233-R 

Additional copies of this publication may be purchased for $4.00 per copy 
plus 7.75% California sales tax. 

Senate Publications 

11 00 J Street, Room B-1 5 

Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 233-R when ordering. 






HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

WEDNESDAY, JUNE 30, 1993 
2:00 P.M. 



DC :PT. 

JUL i 33 

PUBLIC LIBRARY 



234-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, JUNE 30, 199 3 
2:00 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR DAVID ROBERTI, Chair 

SENATOR WILLIAM CRAVEN, Vice Chair 

SENATOR ROBERT BEVERLY 

SENATOR NICHOLAS PETRIS 

MEMBERS ABSENT 

SENATOR RUBEN AYALA 

STAFF PRESENT 

CLIFF BERG, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

JERRY B. EPSTEIN, Member 

California Transportation Commission 

SANDRA R. SMOLEY, Secretary 

State and Consumer Services Agency 

JOHN CANFIELD, Legislative Chair 

Department of California Veterans of Foreign Wars 



Ill 



INDEX 



Page 



Proceedings 1 

Governor's Appointees; 

JERRY B. EPSTEIN, Member 

California Transportation Commission 1 

Background and Experience 1 

Motion to Confirm 2 

Questions by CHAIRMAN ROBERTI re: 

Contingency Plans in the Event Voters 

Again Reject a Rail Bond Measure 2 

Complaints that Commission Is Unduly 

Influenced by Governor's Office 2 

Committee Action 4 

SANDRA R. SMOLEY, Secretary 

State and Consumer Services Agency 4 

Background and Experience 4 

Questions by SENATOR PETRIS re: 

Percentage of Veterans Hired by 

Department of Veterans Affairs 5 

Hiring Qualified Minorities 6 

Program for Improving Procurement Practices . . 7 

Handling of Agency's Budget Problems 8 

Acknowledge of Help to Veterans Who Were 

Victims of Oakland/Berkeley Fire 9 

Questions by SENATOR CRAVEN re: 

Setting of Policy within Departments 10 

Resentment of Departments Telling Legislators 

What to Do 12 

Statement by SENATOR PETRIS re: 

Appointee's Actions in Support of Veterans ... 13 

Witness with Concerns : 



IV 



JOHN CANFIELD, Legislative Director 

Department of California Veterans of Foreign Wars . . 13 

Concern about Hiring on Non-veterans in 

Department of Veterans Affairs 14 

Questions by SENATOR PETRIS re: 

Significance of VFW 1999 15 

Motion to Confirm 15 

Committee Action 16 

Termination of Proceedings 16 

Certificate of Reporter 17 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00-- 

CHAIRMAN ROBERTI: I'm advised that Mr. Epstein has a 
family emergency , so because of that we'll take Mr. Epstein up 
first. 

Jerry B. Epstein, Member of the California 
Transportation Commission. 

Mr. Epstein, we'll ask you what we ask all the 
Governor's appointees, and that is why you feel you are 
qualified to assume this position? 

MR. EPSTEIN: Thank you, Senator. 

I was confirmed by this honorable board approximately 
a year and a half ago. Since then, and before coming to this 
board, I was a member of the Board of Airport Commissioners for 
the City of Los Angeles and involved in transportation matters 
there. I've advocated a train from LAX to Palmdale, which I 
think should be our largest airport to relieve LAX. 

Since being on the board, I was given the assignment 
of Project Delivery that I hope helped in some way, and with 
Senator Bergeson's SCR 72, the investigation on CalTrans and so 
forth, I'm on that audit committee. 

And I feel very positively that transportation can be 
one of the means to get our state back in the black again. I am 
a tremendous advocate both of rail and highway. 

CHAIRMAN ROBERTI: Very good. 

Are there any questions of Mr. Epstein? 

Is there anyone here in opposition to Mr. Epstein's 
appointment? 



SENATOR CRAVEN: Mr. Chairman, I would like to move. 

CHAIRMAN ROBERTI: Senator Craven moves Mr. Epstein's 
appointment to the Floor. 

The voters last year rejected the one billion dollar 
rail bond measure. 

MR. EPSTEIN: Prop. 156, yes, sir. 

CHAIRMAN ROBERTI: I guess there'll be an attempt to 
go one more time with the bond measure, but do you have any 
contingency plans — 

MR. EPSTEIN: Well, I think — 

CHAIRMAN ROBERTI: — in the case we don't win that 
one? 

MR. EPSTEIN: Well, we are trying to do everything 
that we possibly can to prioritize. We're hoping that this time 
— we're hoping that the Legislature will advance such a 
proposition again to give the people of our state the 
opportunity to vote again. And I think this time, I think a 
concerted effort should be made, much more than the other time, 
to make people aware of exactly what we want to do and how 
urgent it is that we do have the means to continue on the 
program. 

CHAIRMAN ROBERTI : There have been some complaints 
that CTC is unduly influenced by the Governor's Office. We have 
a 1990 report of the Senate Advisory Committee on Cost Control 
in State Government sort of indicating that. 

The idea of CTC is that it act independently also of 
its appointing authority — it was set up to act independently 
of the Legislature -- so that these decisions are made 



independent of the Legislature. 

Do you have any observations, rejections, or 
whatever, of that report? 

MR. EPSTEIN: Yes. 

I have been on the Commission for almost two years. 
I have never had a call from the Governor, who did appoint me. 
On some very controversial issues, he has always left it up to 
me. I think it's a very good thing. 

I have been on commissions for the last 23 years, and 
the people that compose this commission, I think, are of the 
highest quality of any commission that I've served on, as well 
as the CTC staff. I've never seen a more hard-working staff, 
whether in the public sector or in the private sector. 

I believe that an independent CTC is vital, vital — 
I underline that -- being able to advise the Senate and the 
Assembly as to what we find. Case in point, a good case in 
point, I think, is the audit that we're having right now, that 
those of us are tremendously interested in, in seeing how we can 
improve a $6.2 billion budget with CalTrans . 

So, I have never been unduly influenced by anybody. 

CHAIRMAN ROBERTI : So, you're saying the Governor nor 
anybody — 

MR. EPSTEIN: In the staff — 

CHAIRMAN ROBERTI: -- in the staff has — 

MR. EPSTEIN: No, sir. 

CHAIRMAN ROBERTI: It's one thing, I think, if they 
would appear before the Commission; something else if you've got 
an ex parte communication. So, I'll take your word for it. 



Are there any other questions of Mr. Epstein? 

Senator Craven's motion is before us. Secretary will 
call the roll. 

SECRETARY WEBB: Senator Ayala. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 

CHAIRMAN ROBERTI: Aye. 

The vote is four to zero; confirmation's recommended 
to the Floor. 

Congratulations, Mr. Epstein. 

MR. EPSTEIN: Thank you very much, Senator. 

CHAIRMAN ROBERTI: We will return to the regular 
order. 

[Thereupon legislative agenda items 
were acted upon by the Committee.] 

CHAIRMAN ROBERTI: Now back to Sandra Smoley, 
Secretary of the State and Consumer Services Agency. 

We're all familiar with you, but we've got to ask you 
the same question: why you feel you're qualified for this 
position? 

MS. SMOLEY: Yes. 

Many of you know that I was on the Sacramento County 
Board of Supervisors for 20 years. It's been a fantastic 
training ground for the job that I've just started. So many of 



my departments have to do with things I dealt with at the 
County. I dealt with General Services issues, procurement, 
contracting, consumer issues, Building Standards Commission, 
Fair Employment and Housing, State Fire Marshal. 

I was able to hit the road running the minute I got 
there. Now I just have to think statewide versus Sacramento 
County. 

But I really feel my 20 years really gave me a leg up 
in being able to be effective in the job that I have. 

CHAIRMAN ROBERTI: Very good. 

Is there any question of Ms. Smoley? 

I think we're all delighted to see you in this 
position. 

MS. SMOLEY: Well, thank you. I am very pleased to 
be here also. 

CHAIRMAN ROBERTI : Having read about you for many 
years, as you do about us, we feel you're qualified, so I don't 
think we have to ask too many questions, but if somebody wants 
to ask them, please do. 

Senator Petris . 

SENATOR PETRIS: I'd like to make the motion, but I 
have a couple of questions. 

CHAIRMAN ROBERTI: Good. 

SENATOR PETRIS: As I discussed with you in my 
office, some people are unhappy about the percentage of veterans 
that are hired by the Department, and some veterans who aren't 
very friendly to the veterans, for some reason. 

I wondered what your policy recommendation is 



regarding hiring practices relating to, first of all, the 
statutory requirement that says we give priority to veterans for 
employment within the Department, and the second, hiring 
qualified minorities, and so forth. Can you give us a comment 
on that? 

MS. SMOLEY: Yes, I can. 

I went back and checked after we had our meeting. 
And of the 13 management people and CEAs, which are considered 
management also, of the 13, 11 have served in the military. 
There were 2 that have not . 

I do believe that veterans -- being a veteran should 
be a priority. I do support that. And obviously, I would push 
to have the people who are there, if they're going to work in 
the Department of Veterans Affairs, they should be at least 
partial to veterans and be supportive of them. 

As far as minority, are you talking about MBE/WBE, or 
are you talking about -- 

SENATOR PETRIS: Racial minorities, ethnic 
minorities . 

MS. SMOLEY: In the Department of Veterans Affairs? 

SENATOR PETRIS: Yes. 

MS. SMOLEY: Well, they have many. Of course, the 
new Department of Veterans Affairs' Director is Hispanic, 
Colonel Vargas. And in top management, there are Hispanic and 
also black, and I, of course, support equal opportunity and 
would be watching that very closely. 

SENATOR PETRIS: I've also had a question regarding 
procurement practices. I don't know which part of your shop 



that falls under. 

MS. SMOLEY: Department of General Services. 

SENATOR PETRIS: Have you had any, in your limited 
time there, any experience of complaints relating to procurement 
practices? 

It's alleged here in a note I got from a colleague 
that — inquires as to what your program is for improving our 
procurement practices. I'm not too familiar with it. 

MS. SMOLEY: Okay. There are three areas that I 
really want to spend time on, and I've been very aggressive on, 
and that's asset management, procurement, and also Consumer 
Affairs . 

Procurement, I believe, needs to have a new look. I 
want to look at it to give the state wide options . I feel that 
we need to look at multiple awards. I'm very open in this 
regard . 

We ' re trying right now to to hire a new procurement 
person. I want somebody who's willing to look at things and 
maybe do things a little differently than we've done in the 
past. I'm going to be very aggressive and personally follow 
this issue. 

I think there are some improvements that can be made, 
both cost effective for the state, and also allowing more people 
to have an opportunity to work with the state. 

So, I will be personally following this after we are 
able to hire somebody. The position is vacant now. I mean, we 
have somebody acting, but, I mean, the person that's going to be 
in procurement, but I share your concern in that regard. This 



8 

is one of the exciting areas that I really think we can make 
some very innovative changes that are going to be positive for 
the state. 

SENATOR PETRIS: As a former Supervisor who's been 
through a lot of budget battles at the county level, and you're 
now seeing the budget battles here, you're being called on to do 
some restructuring, down-sizing, whatever the current fad is in 
describing these things . 

Do you want to comment on how you're tackling your 
part of the budget problems? 

MS. SMOLEY: Well, in asset management, you know, I 
really think that we can get some more money and do things 
better at the state. We have seven regional plans, one of which 
is in your area, Senator, San Francisco/Oakland. 

We think we can save the state money on leases and 
some of the purchases. We think we can be a part of providing 
jobs in your areas. We think we can be a part of doing our part 
in trying to turn the economy around, and that's an area that I 
think all of us are concerned about. 

I think our asset management plan is very aggressive. 
We have seven regional plans, and we are getting fantastic 
response. In Oakland/San Francisco, the Governor's plan is 
being carried by the Speaker, so it shows that we have 
bipartisan support in that regard. 

SENATOR PETRIS: His plan for the East Bay — there 
are two bills — his plan for the East Bay I'm carrying, I'm 
happy to say. 

MS. SMOLEY: Yes. 



SENATOR PETRIS: There's a report on that, and the 
report to the Governor was excellent in consolidating our 
offices and saving a lot of money. 

MS. SMOLEY: Exactly. So, that part. 

Also, we're doing some consolidation in Consumer 
Affairs. We just are looking to consolidate the Funeral Boards, 
Funeral Directors and Embalmers and Cemetery and Crematorium. 
We also have consolidated Barbering and Cosmetology. We're 
looking at streamlining those boards. But more importantly, 
we're looking at making them consumer-oriented, protecting the 
consumer. 

I think in California, the consumer has to be assured 
that their interests are protected, and we cannot have these 
boards and commission protecting special interests. And I've 
been very aggressive in that, putting the consumer back in the 
Department of Consumer Affairs. 

SENATOR PETRIS: That's great. 

Mr. Chairman, I want to acknowledge publicly your 
very, very substantial help that you gave to the veterans. I'm 
talking about the seven or eight fire victims in the 
Oakland/Berkeley Fire. 

They were really getting roughed up by the 
Department. Until you stepped in and really knocked some heads 
together and reminded them of their mission, we weren't getting 
very far. 

I want you to know that all the veterans involved 
that I've met with from my area are very pleased and grateful 
for the help that you gave them. 



10 

MS. SMOLEY: Thank you. 

SENATOR PETRIS: I am, too. 

MS. SMOLEY: Thank you very much. 

SENATOR PETRIS: I hope you keep an eye on that part 
of your shop. 

MS. SMOLEY: Believe me, I will. 

SENATOR PETRIS: Thank you, Mr. Chairman. 

CHAIRMAN ROBERTI: Senator Craven. 

SENATOR CRAVEN: Who sets the policy for some of the 
departments within your purview? Is HCD a part of Consumer 
Affairs? 

MS. SMOLEY: No, no. That is in Business and 
Transportation . 

SENATOR CRAVEN: Well, let's get back to the areas in 
which you have been involved in. 

Do these independent departments, or whatever you 
want to call them, set their own policy, or is that set by the 
Legislature? 

MS. SMOLEY: Now in which area, Consumer Affairs? 

SENATOR CRAVEN: You name it. 

MS. SMOLEY: Well, in Consumer Affairs, we have some 
commissions that set policy that are independent, hire their own 
executive officers. They do have a say. 

We are the umbrella agency. The Department of 
Consumer Affairs is over these boards and bureaus, but we 
have less to say over their policies, per se, but we do have the 
capability of making some input in that regard. 

SENATOR CRAVEN: If you had, and this is 



11 

hypothetical, but if you a group who had no commission, or 
advisory board, or whatever you choose to call them, would they 
then have the ability to set policy? 

MS. SMOLEY: No. In most instances, I would say, no. 
They bring policy matters to me as the Agency Secretary. 
Department people bring forth any policy to me, and I have to 
approve whatever that policy is . 

Now, in some instances, like in General Services, and 
in some instances in the Department of Consumer Affairs, the 
Director has some statutory capabilities to make some decisions 
on their own. 

But I'm working with my departments to be very close 
to the Agency. I want to know about those things, because I'm a 
little bit more of a hands-on Agency Secretary. I think it's 
important that we work together and they keep me posted as to 
the activities they're doing. 

SENATOR CRAVEN: Well, as it relates to your area of 
operation, if the department had a conflict with the 
Legislature, that would in time be funneled up to you for 
decisions as to what seemingly was the appropriate way to handle 
it? 

MS. SMOLEY: That is correct. But once in a while 
the departments get over and speak against an issue that maybe 
the Agency disagrees with. 

SENATOR CRAVEN: That's not once in a while. That's 
more frequent than once in a while. That's why I'm asking these 
questions . 

MS. SMOLEY: Well, I'm aware of that, and I am 



12 

working with my department people to say, "Hey, you come to me. 
Let's work this out." It does no good for us to be coming to 
you and giving you different opinions here. And so, I'm aware 
of that issue. 

I'm very open to work with that, and I'm being pretty 
strict with them, saying, "Let's get this policy together here 
and go together, " versus I think differently and they think 
differently. 

SENATOR CRAVEN: I'm very confident in you and your 
ability to do that. I probably have more confidence in you, 
because I've known you for a couple of decades and the work that 
you've done, than I have in some of the other people who have 
approximately the same type of position. 

But I've gotten to a point where I find that the 
departments are saying what I should do. And I would raise a 
solemn resentment toward that. And I want to make a correction 
there, because I don't think that's the way the system is 
supposed to work. 

MS. SMOLEY: It's my opinion that you're elected by 
the people. And by the fact that you're elected by the people, 
that gives you the capability to speak on issues. 

SENATOR CRAVEN: Well, that's what I'd like to think, 
but some of these people come in, and they're the sine qua non 
of whatever, and I have a little problem. No, I don't; I take 
that back. A lot of problem. 

MS. SMOLEY: A lot of problem. I can understand 
that. 

SENATOR PETRIS: Mr. Chairman. 



13 

CHAIRMAN ROBERTI: Senator Petris . 

SENATOR PETRIS: On that point, when I referred to 
the fire victims, she reminded the agency in charge, which just 
happens to be the CAL-VET people, of what their statutory 
mission was. And they were bucking the statutory mission until 
she turned them around. 

So, my one experience with her has been very positive 
on that very issue. That's why I was pleased and impressed. 

SENATOR CRAVEN: And you feel, I'm sure, Nick, as I 
do, it's very important that we get that squared away. 

SENATOR PETRIS: That's right. 

MS. SMOLEY: Thank you. 

SENATOR CRAVEN: No condemnation of you, Supervisor. 

CHAIRMAN ROBERTI: Please come forward. 

MR. CANFIELD: This is my representative for 20 years 
on the Board of Supervisors, so I'm very pleased that she is 
here . 

MS. SMOLEY: Thank you. 

MR. CANFIELD: And even when I appeared before the 
Board, she never stood up and cheered when I said anything, but 
on the other hand, she did not boo me, so that's in her favor. 

[Laughter. ] 

MR. CANFIELD: I am John Canfield, the Legislative 
Chairman for the Department of California Veterans of Foreign 
Wars . 

And we had a convention down in Ontario last weekend, 
and there were a couple of resolutions approved by the 
membership pertaining veterans preference points, entry 



14 

examinations, and the Veterans of Foreign Wars delegates are 
very concerned about the hiring of non-veterans in the 
Department of Veterans Affairs. And I cannot say that this is a 
large number, but there have been some positions filled by 
non-veterans. And there is a statute which states that, quote, 

"Whenever possible, preference shall be 

given to veterans for employment in the 

Department of Veterans Affairs." 

And my understanding of Ms. Smoley's comments is that 
she has no objections to veterans preference, and we would just 
like to ask Ms. Smoley if my interpretation is correct? 

Do you have any concerns about it? 

MS. SMOLEY: I have no problem with that. I told you 
that I did check on the top thirteen. Eleven of the thirteen 
have served in the military. 

MR. CANFIELD: Mr. Chairman, that is the concern that 
we have. And hearing the answers from Ms. Smoley, we certainly 
are not objecting to her appointment. 

However, I would like to point out that we will be 
watching what does take place, and I will remind my former 
representative that she stated before the confirmation committee 
that she understands the concerns of the veterans. 

MS. SMOLEY: Here's my card. Call me up. 

MR. CANFIELD: I should say, I already have a bunch 



of these. 



MS. SMOLEY: But a new address. 

MR. CANFIELD: Thank you very much, Mr. Chairman. 

SENATOR PETRIS: Question. 



15 

CHAIRMAN ROBERTI: Senator Petris . 

SENATOR PETRIS: I'd like to ask the witness what's 
the significance of VFW 1999? Is that the post number? 

MR. CANFIELD: That Post 1999. 

SENATOR PETRIS: It's not a date of something to 
happen in the future? 

[Laughter. ] 

SENATOR PETRIS: Is that a local post in Sacramento? 

MR. CANFIELD: This is Sacramento post. In fact, we 
are members made up of people who have either worked in the 
Capitol or in agencies around the Capitol. 

SENATOR PETRIS: You're kind of a government chapter 
of the VFW. 

MR. CANFIELD: In fact, it started, Mr. Chairman, as 
a state employee VFW post, and we have now branched out to a 
public employee post, and even further, now we're becoming a 
general VFW post, but we do get involved in legislative matters 
primarily because we have worked around the government. 

SENATOR PETRIS: Thank you. 

CHAIRMAN ROBERTI: Thank you very much. 

MS. SMOLEY: Thank you for coming down. 

CHAIRMAN ROBERTI: Do I hear a motion? 

SENATOR CRAVEN: I'll move. 

CHAIRMAN ROBERTI: Oh, Senator Petris already — 

SENATOR PETRIS: May I join — 

CHAIRMAN ROBERTI: Senator Petris gets the move. 

MS. SMOLEY: Thank you. 

CHAIRMAN ROBERTI: Secretary will call the roll. 



16 



SECRETARY WEBB: Senator Ayala. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 

CHAIRMAN ROBERTI: Aye. 

The vote is four to nothing; confirmation is 
recommended to the Floor. 

Congratulations . 

MS. SMOLEY: Thank you very much. 

[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
2:35 P.M. ] 

— 00O00-- 



17 
CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand 



lis I 



this / day of July, 1993. 



-C^. 





IVELYN J. MlZAK 
Shorthand Reporter 



234-R 

Additional copies of this publication may be purchased for $3.50 per copy 
plus 7.75% California sales tax. 

Senate Publications 

11 00 J Street, Room B- 15 

Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 234-R when ordering. 



6 



HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

WEDNESDAY, JULY 7, 1993 
2:05 P.M. 



DOCUMENTS DEPT. 

AUG 2 7 1993 

SAiN FRANCiSCO 
PUBLIC USSIARY 



235-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, JULY 7, 1993 
2:05 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 
MEMBERS PRESENT 
SENATOR DAVID ROBERT I , Chair 
SENATOR WILLIAM CRAVEN, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR ROBERT BEVERLY 
SENATOR NICHOLAS PETRIS 

STAFF PRESENT 
CLIFF BERG, Executive Officer 
PAT WEBB, Committee Secretary 
RICK ROLLENS, Consultant on Bill Referrals 
NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

LEO BURKE, Member 
California Veterans Board 

SENATOR PATRICK JOHNSTON 

PORTER MERONEY 

Chief Deputy Director 

Department of Veterans Affairs 

GEORGE MANESS, Chair 
California Veterans Board 

P. GREGORY CONLON, Member 
Public Utilities Commission 

SENATOR REBECCA MORGAN 

JANICE WILSON, President 
State Board of Accountancy 

DENNIS CHACONAS, Superintendent 
Alameda Unified School District 



Ill 



APPEARANCES ( Continued) 



PETER ARTH, JR., General Counsel 
Public Utilities Commmission 

SENATOR HERSCHEL ROSENTHAL 



IV 

INDEX 

Page 

Proceedings 1 

Governor ' s Appointees ; 



LEO BURKE, Member 

California Veterans Board 1 

Background and Experience 1 

Introduction by SENATOR PATRICK JOHNSTON 4 

Witness in Support: 

GEORGE MANESS, Chairman 

California Veterans Board 5 

Questions by SENATOR PETRIS re: 

Board's Failure to Carry out Legislative 

Mandate to Build Veterans Home in 

Southern California 7 

Why Diversion to Nursing Homes 8 

Construction Timetable for Barstow 

Veterans Home 9 

Response by PETER MERONEY, Chief Deputy Director 
Department of Veterans Affairs 10 

Funding for Barstow Home 10 

Timetable for Completion 11 

Capacity of Barstow Home 11 

Total of Four Veterans Homes in 

Southern California 11 

Story on Nursing Homes 12 

Qualifications for Entry 12 

Questions by SENATOR AYALA re: 

Major Issues Today for Veterans 13 

Means of Addressing Issue 13 



INDEX (Continued) 

Letters Complaining of Problems at 

Yountville Veterans Home 14 

Legitimacy of Complaints 14 

Questions by SENATOR CRAVEN re: 

Reason for Locating Southern California 

Veterans Home in Barstow 15 

Response by MR. MERONEY 15 

Response by MR. BURKE 16 

Questions by SENATOR PETRIS re: 

Formal Filing of Complaints by California 

Hispanic Coalition Charging Discrimination 

in Hiring and Promotional Practices at 

Department 17 

Response by MR. MERONEY 18 

Board Should Have Been Advised 

of Complaint 19 

Board's Policy on Discrimination 20 

Impression of Policy Making Role of 

Board 21 

Board ' s Procedure for the 

Formation of Policies 23 

Example of Recent Policy Making 23 

Following Advice of Board's Attorney 24 

Percentage of Time Board Goes 

against Advice of Attorney 26 

Treatment of Oakland Veterans after 

Oakland Fire 26 

Background 27 

Department's Attorney Is also Hearing 

Officer and Attorney to Board 28 



VI 

INDEX (Continued) 

Board Denied Appeal of Oakland Veterans . . 28 

Reason for Negative Vote 29 

Statute which Should Have Covered 

the Oakland Veterans 30 

Board's Opposition to Bill which Would 

Rectify Problem in Future 32 

Board Giving Out Misleading and/or Wrong 

Information to Veterans about Insurance 

Coverage 33 

Department Contracted for Study 

of Insurance Programs 33 

Request for Board to Review Policy of 

Attorney Acting in Three Capacities 36 

Board's Role in Checks and Balances 36 

Urge Nominee to Use Same Prod and Spirit 

Used as Commander of Legion in Board Position . 37 

Request Staff to Keep Board Abreast of 

Complaints which Have Been Filed 37 

Request Staff to Keep Board Apprised of 

Legislative Happenings 37 

Motion to Confirm 38 

Committee Action 38 

P. GREGORY CONLON, Member 

Public Utilities Commission 38 

Introduction by SENATOR REBECCA MORGAN 38 

Background and Experience 39 

Witnesses in Support; 

JANICE WILSON, President 

State Board of Accountancy 43 

DENNIS CHACONAS, Superintendent 

Alameda Unified School District 45 



Vll 



INDEX (Continued) 

Questions by SENATOR AYALA re: 

PERS Investment in ENRON, and Possible 

Conflict of Interest 47 

Commissioners' Membership in PERS 48 

Membership on PERS Board 50 

Paperwork Required for Highway Carrier 

Permits 50 

Need to Streamline Process 51 

Questions by SENATOR PETRIS re: 

Plans to Continue Auditing Utilities while 

Serving on PUC 52 

Contact or Experience with Consumers 

Organizations 54 

Ability to Be Objective in Considering 

Consumer Issues on PUC 55 

New Supreme Court Decisions Remove 

Accountability 55 

Response by PETER ARTH, General Counsel 

Public Utilities Commission 57 

New Internal Appellate Process 58 

Publication of Supreme Court 

Decisions 59 

Questions by SENATOR HERSCHEL ROSENTHAL re: 

How to Best Meet California's Needs in 

Area of Telecommunications Infrastructure ... 60 

Vision of Future for State's Electric 

Services Industry 62 

View of Relationship between Legislature 

and PUC and How to Improve It 6 3 

Questions by SENATOR PETRIS re: 

Interaction between PUC Staff and Air 

Resources Board Staff re: Electric Cars .... 64 



V1X1 

INDEX (Continued) 

Response by MR. ARTH 64 

Old Bills to Encourage Electric Cars 65 

Motion to Confirm 66 

Committee Action 67 

Termination of Proceedings 67 

Certificate of Reporter 68 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00-- 

CHAIRMAN ROBERTI : Governor's appointees appearing 
today, Leo Burke, Member of the California Veterans Board. 

Mr. Burke, we'll ask you what we ask all the 
Governor's appointees, and that is why you feel you're qualified 
to assume this position? 

MR. BURKE: Thank you, Mr. Chairman for this 
opportunity to address the Committee. 

As a young man, I joined the United States Marine 
Corps and saw service in World War II. Concern for veterans and 
their well being has been a significant focus of my life for 
nearly half a century. 

I am a past State Commander of the American Legion, 
and also been elected to state membership to serve as 
California's sole representative on the Legion's National 
Executive Committee. The Executive Committee is the policy body 
for the 312 million member organization nationally. I have also 
served in 15 other appointments at the national level of the 
American Legion. Currently I am a member of the National 
Commission on Foreign Relations for the American Legion. I have 
been a member of the Veterans of Foreign Wars for 20 years and 
served for seven years as President of the D.A.V. Charities, a 
component of the Disabled American Veterans . 

I was appointed by former Governor Jerry Brown to the 
San Joaquin County Fair Board, and I was elected Trustee for 17 
years of the Delta Community College District. The District 
serves 25000 students and has a budget of $60 million annually. 



I have received over 1,000 community service awards in my home 
city of Stockton and currently sit on its Planning Commission. 

The charter of the Veterans Board requires it to 
determine policy for all operations of the California Department 
of Veterans Affairs, review and set interest rates for the 
CAL-VET home loan program at least once annually, and to act as 
an appeals body for those California veterans who believe that 
they have been denied a benefit improperly. The Board meets on 
a monthly basis to discharge these duties. 

However, each member of the Board also performs 
another duty which, while not expressly enumerated in our 
charter, is as important as those formal responsibilities. 
Throughout each month, Board members attend a wide variety of 
meetings with rank and file California veterans. We bring to 
them information about how the Legislature and Administration 
are dealing with issues that have an impact on them, and we 
bring back to these halls of government those things that the 
veterans believe should be dealt with. 

I am proud to have been asked by two Governors of 
California to serve on this Board, proud to have been previously 
confirmed in that service by this Committee. I am serving now 
as a member of the Board and have in the past served as its 
Chairman. 

I have served on the Board when its relations with 
the Department of Veterans Affairs have been contentious and of 
questionable productivity, and I have served at a time when the 
relationship has been cordial and productive. I am pleased to 
note that from Colonel Ugalde, Admiral Hacker, and now Colonel 



Vargas, the relationship between Board and Department has 
steadily improved. 

The people of our state and the Members of this 
Legislature consider attention to those who have served our 
nation in uniform is to be great and important with both the 
Department of Veterans Affairs and the California Veterans 
Board. We were created to deal with issues important to them. 
We act as a check and balance system for one another. The Board 
is neither the Department's adversary, nor is it an apologist. 
In order for the needs of veterans to be served appropriately, a 
working partnership must exist. The partnership must recognize 
the legitimate sphere of each member, and each member must work 
to maintain a relationship that creates consensus more than 
conflict. As you know better than most, Mr. Chairman, public 
consensus is only achieved after much attention and effort has 
been given in private to resolving conflicts. 

We are a citizens' Board, Mr. Chairman. We do not 
necessarily bring technical expertise to this post. We bring to 
it our own military experience and those conditions we have 
encountered ourselves as veterans. As citizens and veterans, we 
bring to government an empathy for our comrades that may not 
always be present to those public servants charged with serving 
our interest in a professional capacity. 

I know I speak not only for myself but also for my 
colleagues when I say that our Board works to maintain a state 
of mind that prefers to decide in favor of the veterans in all 
cases where there is even the slightest justification of doing 
so. 



I believe I am qualified to continue in my position 
on the Board because my career as both public official and a 
private advocate has provided me the experience that I will need 
to combine a knowledge of process, an awareness of public 
sentiment, in order to assist in the formation of policy that 
lends itself to useful execution. 

In a time of diminishing revenues and increased 
expectations, I believe my talents can continue to be used in 
the service of my bother and sister veterans and their 
dependents. I wish to continue my service on the Board, and I 
ask for your support so that I may. 

Thank you, sir, for your time. 

CHAIRMAN ROBERTI: Thank you very much, Mr. Burke. 

Is there any discussion or debate? Is there any 
opposition? Any other witnesses? 

SENATOR PETRIS: I have some questions, if I may. 

CHAIRMAN ROBERTI: I think Senator Johnston wants to 
speak to the appointee. 

SENATOR PETRIS: He's your constituent. 

SENATOR JOHNSTON: Sorry, Mr. Chairman and Members. 
I was in conference committee. 

I just wanted to say that the nominee, Mr. Burke, has 
been a long-time friend of mine and constituent and contributor 
to the community and certainly to matters concerning veterans , 
both in organizations that serve veterans as well as helping me 
in some years ago in really bringing to my attention a gap in 
the law, or an inadvertence, that made it very difficult for 
those disabled veterans who needed adjustments in their 



property, in their house or new house under CAL-VET could obtain 
that. And so, Mr. Burke was exceedingly helpful on behalf of 
veterans in getting the law changed, with your support as well, 
Members . 

So, I enthusiastically support the nominee, and I 
hope you will confirm him to this position. 

CHAIRMAN ROBERTI: Thank you, Senator. 

Are there any others here in support? Do you want to 
come forward and indicate your name and the organization that 
you represent. 

MR. MANESS: Gentlemen, my name is George Maness. 
I'm presently the Chairman of the California Veterans Board. 

And it is with pleasure that I'm here before you 
today in the Committee to endorse Mr. Burke for his confirmation 
on the Board. 

Mr. Burke is presently a member of the Board and past 
Chairman of the California Veterans Board. And it was with 
confidence that I, as Chairman, appointed Mr. Burke to Chair the 
Legislative Committee and the policy committee of the Board. 

My association with Mr. Burke dates back beyond my 
appointment to the Board in 1990. As an active member of 
numerous veterans organizations, and as California Department 
Commander of Am-Vets, I was impressed with Mr. Burke's 
commitment to communicate with the veterans of California 
through correspondence or personal contact. 

Since my tenure on the California Veterans Board, Mr. 
Burke has been not only a mentor, but also a friend to admire. 
Leo Burke is that special type of American who is willing to 



service — to serve and sacrifice whenever his nation, state or 
community calls him into service: the U.S. Marine Corps, World 
War II; elected Trustee, Stockton Community College, 17 years; 
and the California Veterans Board, 7 years. And it's for sure 
that money was not the incentive, but rather loyalty and concern 
for others was and is his only motivation, not unlike the 
motivation you gentlemen possess as representatives of the 
people. 

Mr. Leo Burke is a catalyst on the Board. His 
knowledge and commitment to veterans never falters , nor does he 
ever let the rest of the Board members forget our purpose. 

I realize what I've said sounds flowery, but I can 
also assure you that I don't speak with forked tongue. I mean 
what I have said, so give me just a few seconds to elaborate the 
facts. A, Leo Burke's tenure and continued tenure on the 
California Veterans Board helps guarantee continuity. B, Leo 
Burke's close association with individual veterans and veteran 
groups enabled the Board to be more responsive to the needs of 
the California veteran. C, the total commitment Leo Burke has 
demonstrated to his community of Stockton, the State of 
California, and as a uniformed member of the U.S. Marine Corps 
warrants confirmation not only as a reward for his achievement 
and dedication, but because Leo Burke is the right man for the 
right job. 

It with real pleasure, and I do want to re-emphasize 
that Leo is a strong clog on the Board, and we'd appreciate your 
confirmation. 

Thank you. 



CHAIRMAN ROBERTI: Thank you very much. 

Senator Petris has questions. 

SENATOR PETRIS: Mr. Burke, I've heard some good 
things about you from old friends and supporters. I've also 
heard some questions of concern, so I want to go into those. 

The witness just gave an account of how important it 
was to help the veterans and carry out the mission of the 
Board, and there are questions in a few areas that I'd like to 
give you a chance to clarify. They relate to the actions of the 
Board itself and your votes in particular on certain matters. 

One of them has to do with a statute that we enacted 
in the '80s to create — I've lost track of the date; it's been 
a few years — where we enacted a statute intending to create a 
second home for California veterans down in Southern California, 
so we wouldn't just have Yountville. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: And the most the Board has been able 
to come up with are some nursing-type homes instead of a home 
comparable to Yountville. 

It seems to me that ' s a failure to carry out the 
legislative mandate which was intended to help the veterans. 

Can you shed some light on that for me? 

MR. BURKE: I believe, Senator, sir, you're referring 
to the first committee that was appointed on the veterans home 
south? 

SENATOR PETRIS: Well, I'm referring to AB 200, 
carried by Assemblyman Clute, who represented part of the 
southern state, and the bill was passed in 1989 to establish 



8 

one or more additional veterans homes in Southern California, 
since we don't have any at all at the present time. One of the 
other Assemblymen who worked hard on that legislation and 
strongly supported it wrote to the Director of the Department in 
February of 1990, requesting information about a diversion from 
a veterans home to creating six nursing homes instead. So, 
that's been a controversy ever since. 

So, I'd like you to explain to me, as one who's been 
on the Board a long time and also has been Chairman, number one, 
why hasn't the Board moved in the direction of carrying out the 
mandate of the statute? And why has it diverted that toward 
nursing homes, which are not provided for in the statute? 

MR. BURKE: Well, sir, to the best of my knowledge, 
unless I've been quoted out of context, I under no circumstances 
would ever support a nursing home for — a nursing home for 
veterans . 

Now, that might have been in a bill, sir, and in 
order for us to get it started, I feel that and I've always 
taken the position that we should — or we should have the same 
services as Yountville, except for acute care. In acute care, 
the homes south would be located close to a V.A. center. 

As far as a nursing home, I wouldn't support 
something like that, sir, alone. Now, again, with — certain 
times we've taken action to get something moving, but in the 
other components of the bill, I believe, it was as you point 
out, from one to six homes. It could be, with the probably 450 
residents — but again, it was my understanding it has a level 
of care, but as far the other, I couldn't support that, sir. 



9 

SENATOR PETRIS: Well, the information I've been 
given — I haven't read the statute — there wasn't anything 
about nursing homes. It was a new, full veterans home similar 
to Yountville, serving the same purpose, with a much larger 
number of residents than a small nursing home would have. 

MR. BURKE: Yes, sir. Well, it was — 

SENATOR PETRIS: So, the first question is, why 
hasn ' t the Department moved in the direction? Why don ' t we have 
a veterans home now in L.A., since we passed a law in '89? 

MR. BURKE: Well, sir, we do have one now. I thought 
you were referring to their first bill. It's been before the 
elected officials to have a home in Barstow. And there was a 
special commission appointed for this job, and we will have a 
home in Barstow in about two years with -- and it's been passed 
by this body. We've received the funding from the V.A., 20 
million, I believe. 

SENATOR PETRIS: The federal? 

MR. BURKE: Yes. The federal is the first 20 
million, and the state, I believe, sir, and a report is on the 
Chairman's desk on this home, sir. 

SENATOR PETRIS: Can you tell me — 

MR. BURKE: With all levels of care except acute. 
Same quality of life. 

SENATOR PETRIS: Is that under construction now? 

MR. BURKE: No, sir. We expect it to be. It's up 
to, certainly, elected officials when you — in your infinite 
wisdom, but in a year, or possibly a year, it'll break ground on 
it. 



10 

SENATOR PETRIS: In about a year? 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: Well, I hope that estimate is better 
than the normal estimates that we get. You know how those 
things are. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: You're told a year, and you're 
lucky to get it in three years . 

Do you have reason to believe it'll be a year for 
sure? 

MR. BURKE: Yes, if I could ask the technical staff, 
I'd like to have Porter Meroney, please, to deal with that. 

SENATOR PETRIS: Sure. I'd like to get that 
information. 

MR. BURKE: Thank you, sir. 

MR. MERONEY: Thank you. 

I'm Porter Meroney. I'm Chief Deputy Director of the 
Department of Veterans Affairs. 

SENATOR PETRIS: Can you speak up a little, please? 

MR. MERONEY: Yes. I'm Porter Meroney. I'm Chief 
Deputy Director of the Department of Veterans Affairs. 

Mr. Burke is quite correct. We have now a plan in 
place that will enable us to begin construction on a veterans 
home in Barstow, hopefully, by the end of this year, but most 
certainly within the next twelve months . 

As Mr. Burke indicates, we have the funding, the 65% 
funding tied up. The U.S. D.V.A. has committed to make that 
funds available. We have in place a statutory approval to 



11 

arrange a loan for the state's start-up costs, and additionally 
to issue some revenue bonds which we'll need for the state's 35% 
share, and then we'll plan to pay those bonds off through the 
normal operating budget, the annual appropriation for the home. 

But we're, as Mr. Burke indicates, we're very hopeful 
that we'll have this open within the next two years. 

SENATOR PETRIS: So, you expect construction to start 
no later than 12 months? 

MR. MERONEY: Yes, sir. 

SENATOR PETRIS: You expect that it won't take more 
than a year to build? 

MR. MERONEY: It should take around a year, sir. 

SENATOR PETRIS: What's the capacity? 

MR. MERONEY: It will have room for approximately 400 
veterans . 

SENATOR PETRIS: How many are at Yountville? 

MR. MERONEY: Currently the census at Yountville is 
around 1150. 

Now, this Barstow facility is the first of what we 
plan to be at least three other sites. 

SENATOR PETRIS: That was my next question. You're 
going to have three others at least the same size as — 

MR. MERONEY: Yeah, comparable size. 

SENATOR PETRIS: — Barstow? So the total residents 
will be comparable to the 1150 up north? 

MR. MERONEY: Yes, sir. When we have all four, it 
will be around 1600, which will be slightly more than the 
capacity at Yountville. 



12 

SENATOR PETRIS: And what's the story on the nursing 
homes? Are there nursing homes being built or planned? 

MR. MERONEY: No, sir. These are not nursing homes. 
This is the full level of care, short of acute care. In other 
words, a healthy veteran would come in and would live at the 
veterans home, and as he ages, and his need for a higher level 
of care is there, then we'll progressively advance him into 
those higher levels of care. 

But we would not expect this to be a, quote, "nursing 
home". This is a home where the veterans will be making their 
— they will be treated as residents, very similar to what we do 
in Yountville. 

SENATOR PETRIS: There isn't any separate effort for 
six nursing homes? 

MR. MERONEY: No, sir. These are homes, not just 
nursing homes. 

SENATOR PETRIS: The qualifications for entry are the 
same as Yountville? 

MR. MERONEY: Yes, sir. 

SENATOR PETRIS: So it's really a parallel to 
Yountville in Southern California? That's what the statute 
intended. 

MR. MERONEY: That is correct. It's virtually the 
same level of care, the same types of services, with the 
exception of acute care, except that there will be four separate 
sites rather than the one site in Yountville. 

SENATOR PETRIS: Thank you. 

MR. MERONEY: Thank you. 



13 

CHAIRMAN ROBERTI: Senator Ayala. 

SENATOR AYALA: Mr. Burke, what do you see as the 
major issues in California for veterans today? 

MR. BURKE: I see — Senator, sir, I believe it's 
funding and finances. I think that the veterans organizations 
are going to have to go out and work a little harder on 
fundraisings and so forth, because the budget — 

SENATOR AYALA: Fundraising for what purpose? 

MR. BURKE: For the good of the veterans, for the 
disabled veterans and their families. 

SENATOR AYALA: Disabled veterans. 

MR. BURKE: Yes, sir. 

SENATOR AYALA: That is, as you see it, the major 
issue in California? 

MR. BURKE: Yes, I do. 

SENATOR AYALA: And you as a member of that Board, 
how are you addressing that issue? 

MR. BURKE: From the D.A.V. Board, sir, well, we're 
-- I also belong to a D.A.V. Charities Board, and we raised in 
the last 15 years $1,500,000. And we probably put, oh, maybe 
100,000 went to Yountville, a lot has went [sic] to the V.A. A 
lot has went to scholarships for people to go to school, sir. 
And I think this is the area we're going to have to address in 
the future . 

SENATOR AYALA: We get a lot of letters from the Napa 
Veterans Home. There's something wrong. I don't know what's 
wrong with that operation there. 

Are you familiar with that problem? Is it something 



14 

that can be addressed quickly? What is the problem at Napa 
Veterans Home? 

MR. BURKE: Senator, sir, I visit there quite often. 
When I receive a complaint from one of the residents and so 
forth, I channel it through the Department of Veterans Affairs, 
and it's handled in that direction. And I get a report back, 
and it seems to — 

SENATOR AYALA: Are a lot of these complaints 
legitimate? I mean, I get a lot of letters. I'm sure Senator 
Petris gets them as well; he's close to the facility there. 
There ' s so many complaints about the veterans themselves 
complaining about the operation. And I just wonder how many of 
those are really legitimate. 

MR. BURKE: I think it's a well-operated home, 
Senator, sir. 

SENATOR AYALA: Sorry? 

MR. BURKE: I think it's a well-operated home, and I 
think these are probably isolated cases. 

Everytime that a resident contacts me or any other 
member of the Board, we certainly deal with it immediately, and 
the Department is very cooperative in running everything down. 

SENATOR AYALA: I want to channel some of these 
letters to you. 

MR. BURKE: Would you please, sir. 

SENATOR AYALA: Thank you. 

CHAIRMAN ROBERTI: Yes, Senator Craven. 

SENATOR CRAVEN: I just wanted to ask, perhaps, the 
gentleman to your left, why did they locate that home in 



15 

Barstow? Because of the political impact of Senator Ayala? 

[Laughter. ] 

MR. MERONEY: No, sir. 

The commission on which Mr. Burke serves reviewed 29 
proposed sites, various cities in the seven-county area. And 
they considered such things as cost, demographics, geography, 
access to Veterans Administration Hospitals, and so forth. It 
was a subject that was debated very extensively by the 
commission, and they chose Barstow for a number of reasons, one 
of which, Barstow expressed — the City of Barstow expressed a 
very high level of interest in having us come there. 

SENATOR CRAVEN: Oh, I'm sure. 

MR. MERONEY: To the extent that the Barstow 
Community College District actually donated 22 acres free for 
our site. 

SENATOR CRAVEN: Well, it was just a matter of 
inquiry. 

I've been to Barstow. 

[Laughter. ] 

SENATOR CRAVEN: I thought maybe you had a thought 
that you wanted to get it as far away from everything else as 
you could, and if that be the case, you hit it right on the 
head. 

MR. MERONEY: Thank you, sir. 

SENATOR CRAVEN: I'm a San Diegan, and we have a lot 
of military — well, not as many as we have had, I might add, by 
virtue of recent decisions — but I know the people there always 
thought that it would be a very delightful place, which I think 



16 

you would agree. But, you know, the land costs and availability 
probably negated that to a great degree if not totally. 

MR. MERONEY: Yes. 

SENATOR CRAVEN: But I was somewhat facetious in what 
I asked, but I did really want to know how we got it in Barstow. 

MR. BURKE: Mr. Chairman, may I? 

CHAIRMAN ROBERTI: Yes, please. 

MR. BURKE: Senator, sir, San Diego County is being 
seriously considered for one of the remaining three sites. 

SENATOR CRAVEN: Oh, for a — 

MR. BURKE: Veterans home. 

SENATOR CRAVEN: — veterans home. 

MR. BURKE: Orange County is another one. So there 
are four cities that's under consideration subject to the help 
of you elected officials. 

SENATOR CRAVEN: That sounds very good. 

SENATOR BEVERLY: They'll reserve a spot for you. 

[Laughter. ] 

SENATOR CRAVEN: Fine. I'm about ready now, I think. 

I want you to know, ladies and gentlemen, that I am 
the average age of a World War II veteran: 72 years old. 

SENATOR AYALA: I'd like to ask Senator Craven, 
you've been to Barstow, but have you been to Cucamonga? 

SENATOR CRAVEN: Cucamonga? Oh, I've been to 
Cucamonga. That's one of the more forgettable places I've ever- 
been. 

[Laughter. ] 

CHAIRMAN ROBERTI: I take it, Senator Craven, you're 



17 

not running statewide? 

[Laughter. ] 

SENATOR CRAVEN: Cucamonga ' s a very delightful place. 

[Laughter. ] 

SENATOR CRAVEN: I'm serious now. I remember first 
back in the mid- '50s, when I was in the Junior Chamber of 
Commerce. And I went there because it was in my area. As a 
matter of fact, when I became an Assemblyman, so much of the 
area I had, I represented in the Junior Chamber. 

But I went there, and the thing I remember about it, 
Ruben, were the grapes and the very high curbs. Does that mean 
anything to you? Water would run down off the foothills there, 
you know, wash them out without those, sir. I remember it. A 
very, very nice place; a little warm but nice. 

[Laughter. ] 

SENATOR PETRIS: May I resume? 

CHAIRMAN ROBERTI: Senator Petris . 

SENATOR PETRIS: Last month there was an article in 
the Sacramento Union about complaints from the California 
Hispanic Coalition that had been filed formally and officially 
with the State Personnel Board, charging discrimination in 
hiring and promotional practices in the Department. 

Are you familiar with that complaint? Has it come to 
your attention yet, officially or otherwise? 

MR. BURKE: No, sir, it hasn't. I'm not familiar 
with the article, sir. 

I think the Director alluded to a letter was 
received, and that they were handling it there, but to the best 



18 

of my knowledge, there's no discrimination in the Department. I 
don't think we would put up with this. 

Maybe you could add to that. 

MR. MERONEY: If I might? 

SENATOR PETRI S: Yes. 

MR. MERONEY: We did have a complaint alleging 
discrimination that we received sometime ago. We arranged for 
an independent investigator outside the Department of Veterans 
Affairs to come in and review the charges, interview witnesses. 
We gave him full rein authority, autonomy, to talk to whoever he 
wanted. He has subsequently issued a report finding that those 
allegations are without foundation. 

But we have taken the further step, at the State 
Personnel Board's suggestion, of arranging a mediation process 
with a professional mediator, the Department's management 
including the new Director, Colonel J. Vargas, along with 
representatives of the Hispanic Coalition. That meeting is 
scheduled for next week, and we're very hopeful that that will 
provide a forum for us to understand what exactly the 
allegations were and how we can best address them. 

We don't believe that there's been any type of 
discrimination in the Department of Veterans Affairs against 
Hispanics or any ethnic group, but we want to do everything we 
can to ensure that we have the process in place. 

SENATOR PETRIS: What is your role in the Department? 

MR. MERONEY: I am the Chief Deputy Director, which 
essentially means the number two person. 

SENATOR PETRIS: I'm wondering why Mr. Burke hasn't 



19 

been advised of all this. His reaction was, "I don't know." 

It seems to me that, as former Chairman and as a 
member of the Board, he should have been advised immediately, 
and as a member of the Legislative Committee. 

Are you still a member of the Legislative Committee? 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: This kind of an article is bound to 
attract interest among Members of the Legislature, and it seems 
to me there's a gap there. I don't know whose fault it is . I 
don't know whether Mr. Burke isn't interested and would rather 
concentrate on other kinds of issues, or whether the staff 
hasn't informed him, but it seems to me you've outlined a very 
important series of steps here to meet that problem. 

The allegations that were reported in the complaint 
have to do with high level firing; Hispanics constantly being 
passed up and demoted. Maybe that's why Mr. Vargas was 
appointed director. Maybe that'll change now. 

MR. MERONEY: That's certainly possible. 

It is not Mr. Burke's fault that he was not fully 
aware of these series of articles. It's the staff's fault. 

SENATOR PETRIS: No, I'm not referring to the 
newspaper articles. I'm referring to the actual complaint filed 
with the Personnel Board relating to the policies of the CAL-VET 
Board . 

MR. MERONEY: We have — we have not taken that to 
the Board yet on the basis that that's an internal, kind of a 
day-to-day operational situation, as opposed to a policy — as 
opposed to an issue that would come before the Board as part of 



20 

their policy setting function. 

SENATOR PETRIS: I would assume their policy would be 
to oppose discrimination — 

MR. MERONEY: Very much so, sir. 

SENATOR PETRIS: — based upon ethnicity or race. 

Isn't that right, Mr. Burke. What is your policy? 

MR. BURKE: Yes, sir, absolutely. And I want to 
assure you, Senator, had I been aware of this or the article, I 
certainly would have went in and got the answers on it. 

SENATOR PETRIS: Well, I would suggest that you do 
something to see to it that you're informed. Now, I don't 
expect you to be reading all the newspapers. 

Where do you live? Do you live here in town? 

MR. BURKE: I live in Stockton. I don't know how 
recent the article is. I've been in Palm Springs for a week and 
on a vacation for — 

SENATOR PETRIS: Well, good for you. This is dated 
June 1, and we're now in July. 

I'm not concerned so much about your lack of 
knowledge of the newspaper account, although I assume you like 
to keep up with things as they're reported in the press, but the 
fact that the complaint is on file officially and should have 
been brought to your attention right away because it affects not 
only you but all the Board members. It affects that Board and 
reflects on the policy. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: I think if somebody's come to you — 
not filed an official complaint -- and said, "Here's a list of 



21 

cases of people who are well qualified and in line for 
promotion, and most of them were passed up. It's too much of a 
coincidence. There's too much repetition for it to just be a 
coincidence. I think it's unfair and a violation of state law." 

My guess is you would have jumped on that. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: You would try to find out what's 
going on. 

Would you consider that a violation of State Board 
policy if it were true? 

MR. BURKE: If it was true, yes. 

I don't think that this action happened. I'll assure 
you, if I was aware, I would jump on it immediately; meet with 
the Director and Deputy Director. I'm sure the Board's Chair 
would back me. There is no room in this society for any sort of 
discrimination of minorities or ethnic citizens. 

SENATOR PETRIS: Oddly enough, some of the persons 
named as responsible for the discrimination are Hispanic 
themselves. That's happened before in other agencies. 
Sometimes you appoint somebody of that particular community 
thinking they're going to be okay, they know the community, and 
they turn out to be not so sensitive, not as good as others who 
come from another community. 

Let me ask you about what is your impression of the 
policy making role of the Board? I ask you that because you've 
been quoted as saying in a committee a couple of years ago, 
three years ago, that the Board doesn't have any policy making 
role or function. Do you remember that? 



22 

MR. BURKE: No, sir. I might have been quoted out of 
context or something, but I am not aware of ever making a 
statement like that, sir. Because this is — 

SENATOR PETRIS: The direct quote, let me see if I 
can refresh your recollection, because it's important on this 
policy making issue. Is the Board going to make policy or not? 

October 24, 1989, Senate Committee on Veterans 
Affairs, quote: 

"There has been no history of the 

Board serving in a policy making role, 

which has been an ongoing source of 

controversy that has not been completely 

resolved. " 
Close quote. 

Now, do you remember that? 

MR. BURKE: No, sir, I don't. 

SENATOR PETRIS: Whether it's your quote or not, is 
that a true statement, that the role of the Board has not been 
policy making? 

MR. BURKE: Absolutely not. That's one of the main 
responsibilities of the Board is policy making for the 
Department . 

SENATOR PETRIS: And how does that come about? Do 
you send memos to the Department — 

MR. BURKE: Yes, yes. 

SENATOR PETRIS: — recommending certain policies, 
ordering policies? 

MR. BURKE: Yes. I think the Board has the final -- 



23 

final say on policies. 

SENATOR PETRIS: Can you walk me through that 
procedure? 

Let me shorten it. If an issue comes up that has a 
policy importance, and you don't find any expressed written 
policy relating to that issue, how do you make it a policy? Do 
you pass a resolution or a motion? Do you direct the secretary 
to send a letter — 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: — to the Department or a particular 
part of it? How do you go about making this policy? 

MR. BURKE: We would sit down and study the issue, 
get legal advice on it, write it up, discuss it with the 
Department. And then, of course, then would implement it by 
action of the Board that the policy would go in our policy book 
where we have about 48 policies now, Senator. 

SENATOR PETRIS: That's a formal action that you take 
and it goes on the record. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: Can you give me an example of some 
recent policy that might be in the book that was made by the 
Board, something that comes to mind? 

MR. BURKE: Well, one we have, we have a geriatrics 
research policy in the mill now for Yountville. The last policy 
revision we had in our book was 1988, sir, and we're in the 
process now of going through housekeeping, and of course, we 
can't touch the policies that are law unless we present them 
back to your official body. But '88 is the last time, sir. 



24 

SENATOR PETRIS: What was that? Is that a new 
wrinkle in the geriatric program? 

MR. BURKE: Yes, sir. We're getting the doctors 
involved, the physicians involved in it and so forth, methology 
[sic] and so forth, sir. 

SENATOR PETRIS: That's now official policy? 

MR. BURKE: No, no. It's being — it's in the mill 
now. 

SENATOR PETRIS: How long does that normally take? 

MR. BURKE: I would say probably talking about 
usually two Board meetings, a couple months. It would be 
announced at one Board meeting, then become official at the 
following Board meeting. 

SENATOR PETRIS: The Board is required to meet or 
does meet once a month? 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: Do you always have a quorum? 

MR. BURKE: Yes, sir, we have had as of a recent 
date. 

SENATOR PETRIS: It makes you better than some of our 
committees . We have a tough time getting a quorum once in a 
while. 

You mentioned you referred to the attorney; you have 
to check with the attorney. And the attorney officially advises 
you on, I suppose, legal questions relating to the policy. 

MR. BURKE: Yes, sir, only on legal questions. 

SENATOR PETRIS: Do you always follow the attorney's 
advice? 



25 

MR. BURKE: No, sir. 

SENATOR PETRIS: How often? 

MR. BURKE: Well, that's — 

SENATOR PETRIS: Most of the time, I suppose, you do 

MR. BURKE: Yes, that would be a correct statement. 

SENATOR PETRIS: What percentage would you say? 

MR. BURKE: You mean for policies or -- 

SENATOR PETRIS: Any legal advice you ask of the 



attorney 



MR. BURKE: Well — 

SENATOR PETRIS: He says, "This is the way you have 
to go under the law. " Do you always go that way? 

MR. BURKE: No, sir. 

SENATOR PETRIS: Sometimes you have reservations? 

MR. BURKE: Definitely, and a lot of times I check it 
out with private counsel, sir. 

SENATOR PETRIS: The Board hires private counsel as a 
second opinion? 

MR. BURKE: No, sir. I go to friends in the veterans 
community. 

SENATOR PETRIS: Pro bono? 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: What percentage of the time do you 
have to do that? Is it 5%, 10%, half the time? 

MR. BURKE: Again, Senator, sir, I act as one Board 
member, and I would probably do it 5% of the time, yes. 

SENATOR PETRIS: Do the other Board members do it 
about the same percentage? 



26 

MR. BURKE: I know they've done it, sir, but I 
wouldn't dare venture to say how often. I know they have. It's 
a matter of record. 

SENATOR PETRIS: I was interested not only in your 
individual policy but the Board as a whole. Would you say the 
Board policy generally runs about the same as yours? 

MR. BURKE: Yes. 

SENATOR PETRIS: Five percent of the time you've got 
to do something else, or check with somebody else? 

MR. BURKE: Yes, sir. In my opinion, sir. 

SENATOR PETRIS: Yes. 

MR. BURKE: I wasn't satisfied, and I wanted to make 
sure that — it's very hard, sir, to take a position against a 
veteran and their families. 

SENATOR PETRIS: Well, it's been done. I don't know 
how difficult it is, but that brings me to the next subject. 

I happen to live in the Oakland area. I had big 
problems with the Board — with the Department, I should say, 
not the Board — on the way the veterans were treated in that 
fire. I had a lot of meetings with Admiral Hacker. Frankly, I 
think it was disgraceful. 

I think that Board and the staff is supposed to 
follow the law, which is, the main mission of the Department is 
to help the veteran. Now, there's several aspects to this. I 
don't want to take up too much time, but it's important. I've 
worked on this a long time, and I've been very disappointed, to 
the point where I had to put in a couple of bills to see that 
the proper policy was carried out. 



27 

One of the bills is opposed, is still being opposed, 
by you and the other members of the Board. I'm curious as to 
why. I'd like to get that cleared up. 

But let me go back. First of all, let me look at the 
procedure. Now, according to what the veterans have said to us 
in committee, not just to me, back in Oakland, and in my office, 
and up here, when they filed a claim to be reimbursed for the 
losses in the fire, they were told that they didn't have enough 
insurance, and they weren't going to get the amount necessary to 
rebuild their homes . 

Now, the person who told them that was the attorney 
for the Board, the attorney for the Department. I don't know if 
he's here today. Is the attorney here? What's his name, 
Jackson? 

MR. MERONEY: Mr. Jackson. 

SENATOR PETRIS: He's not here. I probably should 
have asked that he be here today. 

That's why I also asked you questions about how often 
you followed the advice of the attorney. 

So now the veterans — a little background there — 
the veterans testified that several times after a couple of 
other fires, they had called the Department and said, "We want 
to upgrade our insurance." They said, "You don't have to. It's 
automatically taken care of. So that at the time you have a 
fire in the future and it costs more to rebuild the house, 
that's automatically covered." And they were discouraged from 
going any further. 

When the claim was rejected, they fell back on a 



28 

regulation that says it's up to the veteran to do it, which 
contradicts the statute which says it ' s the duty of the 
Department to do it . 

All right. So now here they are, looking at the 
agency designed to help them. They've got insurance with the 
agency, and their representative, the attorney, says, "No." So 
they appeal it. They ask for a hearing. The hearing is 
conducted by a hearing officer. 

Your agency, your shop, is the only one that I know 
of, the only one any other Legislators know of that I've talked 
to, that has that same attorney act as the hearing officer. 
That seems very, very strange to me. That's why I put in the 
bill. 

I would like the Committee Members to take note of 
that. 

The attorney turns them down. They go to a hearing. 
That attorney is now the hearing officer. He turns them down 
again. 

Their last resort is to appeal to the Board. And 
guess who's sitting there with the Board, arguing against their 
claim but that same attorney/ judge/prosecutor/ jury, who says no 
again. So, the Board turns them down, including you, Mr. Burke. 
You voted no on that issue. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: I'm shocked and surprised. I mean, 
these people are veterans, and they don't ask for much. They're 
veterans of World War II, and the Korean War, all three of the 
wars we've had, you know, since I was in the Army in the Civil 



29 

War. Sometimes it seems that way. 

And I don't understand a system that has the same 
person serve as counsel, and then judge, and then counsel to the 
appellate court. That's what it amounts to. I don't know of 
any other agency that does that . 

And one of the bills that I have says, "You're not 
going to do that any more." When the Department attorney turns 
you down, you have a right to an independent judge, like we do 
in all other agencies, an administrative law judge, or whatever 
the designation is. 

And yet, when they went to the Board to appeal this, 
the Board turned them down. I don't understand that. 

Can you tell us why you voted against the veterans in 
that situation, to deny the amount of money that they were 
seeking, just enough to rebuild a house, no more than that? 

MR. BURKE: Well, sir, I've been through earthquakes, 
and floods, and this catastrophic event of the Oakland Fire was 
awesome, sir. I understand it melted the foundations, and so 
forth. 

We listened to the — our counsel. We listened to 
the veterans' counsel. I went out and got independent decisions 
to see if there was some loophole there, sir, to be able to 
change my vote . 

But why we turned it out, sir, it ended up as a 
matter of law, in my judgment. I'd liked to have changed that. 

SENATOR PETRIS: Now, if you have a couple of laws 
that are in conflict with each other, and one of them says, "Do 
it; you may do it," and the other one says, "You don't have to," 



30 

which one would you choose in an effort to help the veterans? 

MR. BURKE: Well, I'd do my best, sir, to come down 
on the side of the veteran. 

SENATOR PETRIS: All right. Here's California Code 
Regulations, Title 12, Section 360, Fire and Hazard Insurance: 

"All properties purchased by the 
Department must be insured against fire 
and other hazards for the full replacement 
cost ..." 
Let me repeat that: 

"... for the full replacement cost of the 
improvements or structures thereon. " 
Now, "purchased", of course, most people don't know 
this; I have to explain it. When a CAL-VET gets a loan, the 
property is owned by the Department . It ' s not owned by the 
veteran, unlike regular insurance. You know, I insure my house 
I don't turn it over to the insurance company, but the veteran 
does. So, he's really at the mercy of the Department. 

"The insurance must be in such 
minimum amount and placed with such 
company or companies as the Department may 
determine from time to time except that 
condominium units may be insured under a 
master policy ..." 
and so forth. 

Now that regulation, to me, is very clear. I'd like 
to know what statute you relied on to say, "No, that doesn't 
cover it. Some other regulation or statute covers it." 



31 

I don't know what could be more clear than this. 
Yet, they were turned down on the basis that they're not 
entitled to full replacement cost because the level of insurance 
at a given time wasn't enough to cover the present-day costs of 
the fire. 

MR. BURKE: Sir, in my judgment, I'm not an attorney 
and I can't answer that, but the facts that I had before me -- 

SENATOR PETRIS: Well, did your counsel advise you -- 
in light of this, your counsel said, "Don't pay"? 

MR. BURKE: Yes, sir, in essence, yes. 

SENATOR PETRIS: Did you go to other counsel to get 
some additional help, if that raised questions in your mind? 

MR. BURKE: Yes, I did. 

SENATOR PETRIS: And what was the answer there? 

MR. BURKE: I got an answer, Senator, sir, on the 
overall -- 

SENATOR PETRIS: Not on that specific — 

MR. BURKE: -- not on that specific question. 

SENATOR PETRIS: All right. Now, if you say no to 
the counsel 5% of the time, don't you think this case would 
qualify for part of that 5%, in view of the fact there ' re only 
seven veterans involved in the whole thing? There were over 
3,000 homes destroyed in that fire; only seven were veterans. 
And they were told, "No." 

Didn't that bother you? 

MR. BURKE: Certainly, sir, it bothered me. I think, 
though, you have to treat everyone alike, every veteran that 
takes a CAL-VET loan. 



32 

SENATOR PETRIS: Were there others in the same boat? 

MR. BURKE: No, sir, not to my knowledge. 

SENATOR PETRIS: So who is it you're treating alike? 
Who are you comparing it to? 

MR. BURKE: Well, again, when you make rules and 
regulations — I would hope, sir, that an instant like this 
would never happen again, sir. And I think we can build 
policies that allow this, and of course, you're carrying bills 
that ' s attractive . 

SENATOR PETRIS: But it's opposed by you and the 
Department -- and the Board, I mean. 

MR. BURKE: I don't know that I — in its present 
form? You've got amendments on it, sir? 

SENATOR PETRIS: Well, I don't know about the latest 
amendments. You're still opposed, I'm informed. 

Would you review that policy? 

MR. BURKE: Well, sir, it was amended while I was 
away, and I haven't recently seen it since the June amendment on 
it, but I certainly intend to do it, and certainly take it to 
committee . 

SENATOR PETRIS: I would ask you do that. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: Here's a Code section, not a 
regulation, 987.76: 

"The Department shall be the sole 

judge of the amount of insurance to be 

placed upon the buildings, fences, other 

permanent improvements, and crops in the 



33 

amount necessary to be paid for the 

premiums of such insurance." 

Now, that could have been used in answer to your 
attorney, who says, "Hey, it's up to him. If he didn't write 
out something, he didn't do this and that, he can't get full 
replacement. " 

This says the Department is responsible. 

Now, another complaint I had was that the Department 
really doesn't have insurance people. It doesn't consider 
itself to be in the insurance business. So, when a veteran 
calls for help, some clerk is answering the phone who knows 
nothing about insurance and is giving out misleading 
information. Not for the purpose of being personally 
misrepresenting, but that they just don't know any better. And 
when they say to the veteran, "Don't worry about it. Your 
coverage automatically increases over a period of years and you 
don't have to do anything," they rely on that. 

It turns out that that's false because that's not in 
compliance with the policy as expressed by you and the Board 
later, when you said, "No, you don't have enough insurance to 
get full replacement. You've got to go find the money somewhere 
else. " 

MR. BURKE: Senator, on the positive side, C.D.V.A. 
contracted for a study of insurance programs by an independent 
consulting firm of Warren, MacVay and Griffin to study and make 
recommendations to be submitted in July, 1993. 

SENATOR PETRIS: To do what? 

MR. BURKE: On insurance, sir. Just to — insurance 



34 

people are going to do this. I realize it's after the fact. 

SENATOR PETRIS: Well, it's good to have a policy 
improve. That doesn't help the present veterans. 

MR. BURKE: No, sir; no, sir. 

SENATOR PETRIS: Now, after I had some meetings with 
Admiral Hacker, before I even put the bill in, he issued an 
administrative order ordering a change in the policy. There's 
only one policy. The veteran doesn't get an individual, 
separate one. It's one policy that covers all the veterans. 
So, that's easy to change, requiring full replacement value for 
everybody in the future. 

That still didn't help those veterans. They had to 
file a lawsuit, and they finally got a settlement, and it cost 
them a lot of money, and anguish, and grief. 

I don't understand why a veteran should be compelled 
to sue the Department that ' s supposed to be providing them 
with insurance and with help generally. 

I don't understand why the Department opposes a bill 
that tries to correct that policy. You're right, it was a June 
amendment, but you're not familiar with it yet? 

MR. BURKE: No, sir, I was away. 

SENATOR PETRIS: Well, I would urge you to take a 
look. 

MR. BURKE: I can assure you, Senator — 

SENATOR PETRIS: And I'd like to talk to about it 
further later on. 

MR. BURKE: I would be my pleasure, Senator. 

SENATOR PETRIS: I think you can understand the 



35 

concern I have as a veteran myself, who spent a lot of time with 
these veterans who came up to Sacramento to testify and 
explained the problem to the members of the committee in both 
Houses . 

MR. BURKE: And we thank you, sir, for your help in 
settling the claims, because I understand that they're settled 
at this point? 

SENATOR PETRI S: Pardon me? 

MR. BURKE: I believe the claims are settled at this 
point, thanks to your efforts. 

SENATOR PETRIS: Well, I'm happy to confirm that. It 
was settled. Sandra Smoley had a lot to do with that, out of 
the Consumer Affairs Department. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: She jumped all over a couple of 
people in the Department who kept saying no. 

I just find it very, very hard — you can see I'm 
frustrated right now — I find it very hard to understand why 
that kind of a policy should be carried out, and why the Board 
would not only permit it, but support it, and ratify it, and 
vote for it. I mean, I wish you could have some way to clean 
that record and just say, "Wipe out the minutes for that 
meeting, and let's vote all over again, and now that we know 
more about it, let's take another look at it." Just for the 
record. 

They've been taken care of finally, but they had to 
pay the attorney a lot of money. There are no attorney fees 
coming out of the Department for that, so they're not whole. 



36 

They get money to rebuild the house, but out of that money they 
had to pay a lot of expenses . 

Now, would you also review the policy of having the 
attorney act in all three capacities? To me, it seems like it's 
downright un-American. It violates due process and kinds of 
other things, I think. I'd like to have you review that and ask 
yourself whether that's justified. It doesn't happen in any 
other agency in the state, where a business licensee comes 
before them, or a complainant, or whatever. 

I just have a couple more questions. You mentioned 
that you think the Board plays a good role as a check and 
balance. Can you elaborate on that for me? 

MR. BURKE: Well, sir, we — 

SENATOR PETRIS: Who are you checking and how are you 
balancing? 

MR. BURKE: Well, sir, we have approximately 47 
policies. We make visitations in the Department, and any — if 
there's a complaint of any kind and so forth, we'll see if the 
policies are working, sir. 

SENATOR PETRIS: You used to do that as a Commander 
of the American Legion, didn't you? 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: Kept prodding the Department to make 
sure they took care of the boys . 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: I got some rave reports on you as a 
Commander of the American Legion. A couple of the persons who 
told me that are out here in the audience now. 



37 

But I'm surprised that same policy you haven't 
carried over into the Board. I don't want to dwell on it. The 
most dramatic example, of course, is the fire. 

Well, I would urge you to apply the same prod and 
spirit that you used as Commander of the Legion in your capacity 
as a Board member. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: I would also ask that you sharpen 
the awareness and alertness of whatever staff you rely on to 
keep you abreast of things like we discussed before, filing of a 
complaint. You may not be able to act on that complaint because 
it goes through a certain formality, and you can't interfere 
with that. I understand that. But you can certainly find out 
who's doing what, and how deep this is, and how extensive, if 
it's true at all. 

I would also ask you to ask them to be more alert and 
sensitive to keep you apprised of what's going on in the 
Legislature, and give more serious thought to what role you, as 
an individual Board member, or the Board as a whole, may play. 
You could be of great help to us in the Legislature from time to 
time on responding to the needs of the veterans, to the extent 
that they require legislation from time to time. 

MR. BURKE: Yes, sir. 

SENATOR PETRIS: Thank you, Mr. Chairman. 

CHAIRMAN ROBERTI: Thank you, Senator. 

Any other questions? 

Anyone else in the audience wishing to testify, 
please come forward. I guess no one. 



38 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN ROBERTI: We have a motion by Senator 
Beverly to recommend confirmation. 

The Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 

CHAIRMAN ROBERTI: Aye. 

The vote is five to zero; confirmation is recommended 
to the Floor. 

Congratulations . 

MR. BURKE: Thank you, sir. 

[Thereupon legislative agenda items 

were acted upon by the Committee . ] 

CHAIRMAN ROBERTI: The next is the appointment of P. 
Gregory Conlon, Member of the Public Utilities Commission. 

Senator Morgan is here to introduce Mr. Conlon. 

SENATOR MORGAN: Thank you. 

Mr. Chairman and Members, it is my pleasure to 
introduce a constituent from the 11th District to you this 
afternoon. 

Mr. Conlon, as I'm sure your resume tells you, was a 



39 

30-year employee of Arthur Anderson. I think these analytical 
skills that were developed in that period of time will be very 
useful on the PUC. 

I'm also very impressed by the fact that he has 
committed so much of his life to education and to community 
service, and most recently with Total Quality Management 
principles that he has been employing in his volunteer work. I 
think that also will be of benefit to the PUC. 

Whether it ■ s Schools of the Future Initiative in 
Alameda Unified School District in Senator Petris ' s District, or 
the Industry Education Council of California, which has been 
near and dear to my interests, or his Self -Help for the Elderly 
in San Francisco, I think you have before you a man who has 
contributed in the past and will be a major contributor on the 
PUC and will serve this body and this state with exemplary 
performance. 

CHAIRMAN ROBERTI: Thank you, Senator Morgan. 

Mr. Conlon, we'll ask you what we ask all the 
appointees, and that's why you feel you're qualified to assume 
this position? 

MR. CONLON: Yes. 

Before I do that, I want to thank Senator Morgan for 
her kind comments and her introduction to the Committee for me. 
Thank you very much, Senator. 

Getting to your question, Senator Roberti, I just 
want to re-emphasize some of the points that Senator Morgan 
made. The two qualifications I believe I have are the 
professional experience I had with my 30-year career with Arthur 



40 

Anderson, where I was primarily responsible for the independent 
audits of public utility companies, electric, gas, and 
telecommunication companies. In that process, I was able to 
develop skills in accounting, finance, income taxes, and rate 
making. So, I believe that those skills were developed, but I 
think more important was my understanding of the industry. In 
order to do a sufficient audit, you need to understand the 
economics of the industry in order to evaluate the transactions 
that occurred in a given year. So, I believe my experience has 
trained me to be a good practitioner as far as the skills are 
concerned, but more important, to understand the economics of 
the industry. 

I believe that in auditing the financial statements, 
we need to attest to the fairness of those financial statements, 
and I believe that that is very similar to reaching a decision 
on the PUC, that you evaluate the facts, you form a conclusion, 
and you issue an opinion in the case of the audited financial 
statements, and you issue an order in the case of the PUC. 

I think in both cases, independence and objectivity 
are key characteristics for both roles. And I have here today a 
witness that will further mention the requirements of the 
profession with regard to independence and objectivity of a 
particular audit client. 

In addition to my audit responsibilities, I performed 
several special projects that — where independence and 
objectivity were required, and I testified as an expert witness 
in a number of jurisdictions, ten different states, and before 
the National Energy Board in Canada. 



41 

I think that in addition to my professional 
experience, as Senator Morgan mentioned, I've spent a lot of 
time in the community and in the education process. And I'll 
just very quickly go through that. 

I've worked for ten years with Self -Help for the 
Elderly. This is a senior citizen agency in Chinatown that 
serves over 20,000 seniors. I was on that board and an officer, 
and I was on the board and an officer of Pineview Housing, which 
is a subagency where we built a public housing project of 7 
units on top of the Broadway Tunnel in San Francisco's 
Chinatown. So, we are very pleased with that project. I think 
more important, we are providing social services to the Chinese 
community in Chinatown in San Francisco. 

In addition, on a statewide basis, I was board member 
and officer of the Industry Education Council for the last four 
years, where we — our primary initiative has been K-12 
education and jobs, from graduation to jobs. Otherwise, the 
career training, a transition for high school graduates into the 
workforce. And that Industry Education Council has become very 
active in the last couple of years and is doing some great 
things for the state, in which Senator Morgan is supporting 
them. 

Finally, I want to talk about the efforts in Alameda 
Unified School District. Arthur Anderson, after my retirement 
in 1991 from Arthur Anderson, they retained me as a consultant 
to work pro bono with the Alameda Unified School District. And 
in that exercise, primarily as a change agent or facilitator to 
bring change to the classrooms and to the schools of Alameda 



42 

Unified School District. That district is about 10,000 students 
of 20 different schools, and the majority of the students are 
minorities. So, I think it's a very diverse school district, 
and if we can help them create a vision, which is one of our 
objectives, and implement the graduate profile, which they have 
developed over the last two years, that if we can do that in 
Alameda, or if they can do that in Alameda with our support, 
that that will be a real tribute to the state, and we're hoping 
that that will happen. 

Finally, as Senator Morgan mentioned, the Quality 
Initiatives, in connection with putting quality in schools, I 
became a student of quality myself because I was concerned about 
doing something for the schools, and I wasn't convinced myself. 
So, I became a student of quality as practiced by Dr. Demming, 
and I've spent almost three weeks through his training programs 
over the last two years, and I believe that I'm comfortable with 
the Quality Initiative in the school district. Hopefully, that 
will help me at the PUC in implementing similar type programs. 

So, I think those are the two major qualifications: 
my professional career which allows me not only to be a 
professional accountant, but to have business perspective to 
bring to the issues; and my community and charitable work that 
I've demonstrated over the last ten years. 

So, I think with that, I have two witnesses, if you 
want me to go ahead. 

SENATOR CRAVEN: Fine. Why don't you have them come 
up one at a time, Mr. Conlon. 

MR. CONLON: The first is Janice Wilson, who is the 



43 

President of the State Board of Accountancy, will deal with the 
issue of independence. 

MS. WILSON: As a little bit of background, the 
California Board of Accountancy is a 12-member board that 
regulates the practice of some 60,000 California CPAs and public 
accountants . 

And I'm here today to make this statement before you 
about Mr. Conlon that, while he was a practicing CPA, and as the 
audit partner of Arthur Anderson and Company, he was required to 
maintain his independence from his utility clients, from all of 
his audit clients, both in appearance and in fact. 

Independence is a concept that ■ s fundamental to the 
accounting profession. It's a cornerstone of its philosophical 
structure. This difference can best be seen when it's compared 
with other professions, such as law and medicine. An attorney's 
duty is to his client; the doctor's duty is to his patient. But 
when a CPA expresses an opinion on the financial statement, his 
first duty is to those that rely on that financial statement, 
which is the public, not the client. 

No matter how competent a CPA may be, the CPA ' s 
opinion will be of little value to those who rely on it unless 
the CPA maintains that independence. To further ensure 
independence, the Securities Exchange Commission requires that 
all audit partners of SEC clients rotate off an audit assignment 
at the end of a seven-year period of time. Mr. Conlon has 
informed me that he did in fact rotate off the in-charge audit 
responsibility of his most recent SEC utility client in 1987. 

The California Accountancy Rule Number 65 explicitly 



44 

sets out standards of independence for a CPA, and you have it 
there to read, so I'm not going to read it to you. But the 
concept is that the independence is determined by assessing the 
accountant's financial, promotional, managerial, and other 
relationships with the enterprise to determine whether in the 
circumstances the auditor's opinion would be considered 
independent, objective, and unbiased by one who had knowledge of 
all of the facts. 

The American Institute of CPAs, AICPA, and the 
Securities and Exchange Commission have strict interpretations 
on independence. In fact, the second general standard of 
generally accepted auditing standards indicates that in all 
matters relating to an assignment, an independence in mental 
attitude is to be maintained by the auditor or auditors . 

The Code of Professional Ethics of the AICPA also 
states that the public expects a number of character traits in a 
certified public accountant, but primarily integrity and 
objectivity, and in the practice of public accountancy, 
independence. This means that even in a controversial 
discussion with a client, the CPA must maintain absolute 
integrity and objectivity, and not allow that objectivity to be 
impaired. 

As an independent auditor, the CPA performs this 
unique service of impartiality and objectivity. Thus, a CPA who 
audits an enterprise must maintain a strict relationship between 
the client and the CPA so that his or her independence is not 
impaired . 

And I trust that this information helps you as you 



45 

consider this decision today. 

SENATOR CRAVEN: Fine, thank you very much. We 
appreciate it. 

MR. CONLON: Thank you, Janice. 

The other witness is Dennis Chaconas, who is the 
Superintendent of the Alameda Unified School District. 

SENATOR CRAVEN: Very well, here he comes. 

MR. CHACONAS: Good afternoon. 

A little background. Before assuming the 
Superintendence of Alameda Unified School District, I was an 
employee of the Oakland Unified School District for 23 years. 

SENATOR PETRIS: Principal. 

MR. CHACONAS: Yes, I was Principal of Oakland 
Technical High School. 

But in my last duties, I was the Area Superintendent 
and was in charge of Prescott Elementary School. We met there, 
Senator Petris . 

As coming in as four weeks ago as the new 
Superintendent of Alameda Unified School District, I had the 
pleasure to interview staff members, parents, community members, 
and students about who was the movers and shakers in the Alameda 
Unified School District. 

I left Oakland for one main reason, and I felt that 
Alameda was at the cutting edge of educational reform, and that 
was due to the graduate profile and the new visions for 
education in Alameda. 

In my questions with these individuals about who was 
the person that was pushing this agenda, that was helping to 



46 

refocus education in Alameda, because I wanted to know who I 
should thank for making me a candidate for the Superintendency . 
And continuously, Greg Conlon ' s name came up, and it was 
unallocated. They just brought up his name. 

I'd like to read some of the statements that these 
individuals made. 

"Greg Conlon has the ability to 

listen and understand what roadblocks we 

were facing in the district. He is 

willing to look at a problem from all 

perspectives. He is willing to go beyond 

the normal set patterns of thinking and to 

take a beyond the dots approach to problem 

solving. " 
One of the key documents that is used as a kind of Bible in 
Alameda is to go beyond the nine dots. And when says that Greg 
Conlon has that ability, that's a tremendous compliment. 

"He's a friend for all students, 

staff and parents." 
And finally, 

"Greg Conlon [this is from a 

teacher] gave me a new view of what the 

business world wants out of public 

education. " 

In preparing to testify, I thought of the qualities 
that you must be looking for, and I think Greg Conlon would be 
an excellent addition to the PUC. And it is a pleasure and an 
honor to recommend him for this position. 



47 



Thank you. 

SENATOR CRAVEN: Thank you very much, sir. 

Are there any questions of the Members? Senator 



Ayala. 



SENATOR AYALA: Mr. Conlon f last week the Sacramento 
Bee ran a story announcing that PERS, the Public Employees 



Retirement System, decided to invest $250 million in a joint 
venture with ENRON. Based on this significant investment, does 
the PUC regulate or have dealings with ENRON? 

MR. CONLON: Well, ENRON, I believe, is a party to 
certain proceedings. I know the most recent one I can think of 
is the San Diego Gas and Electric . They were a party to the 
performance incentive rate making. So yes, they are party on 
occasion. 

SENATOR AYALA: So, you do regulate ENRON. 

MR. CONLON: Well, in — they are a party. I'm not 
sure — they were an owner of — or maybe they still an owner of 
one of the two pipelines, Transwestern. It must be 
Transwestern. 

Let me verify that. 

Yes, that's true. They own the Transwestern pipeline 
which supplies gas to Southern California. 

SENATOR AYALA: And so, the PUC does get involved 
with that company? 

MR. CONLON: Well again, we do not regulate 
Transwestern. They're regulated by the Federal Energy 
Regulatory Commission. 

But I have to believe that ENRON is a party to our 



48 

cases on occasion — on several occasions. 

SENATOR AYALA: Are you or any other member of the 
Commission members of PERS? 

MR. CONLON: On the Board, are you saying, or do you 
mean as a pension — 

SENATOR AYALA: Are members of PERS? 

MR. CONLON: Yes. 

SENATOR AYALA: Yes, you are. 

MR. CONLON: I'm a recent member myself. 

SENATOR AYALA: Do you see any conflict of interest 
in making potential decisions that affect PERS and ENRON, since 
you're a member of PERS and you're dealing with a utility, and 
you're investing one in the other. Is there a conflict of 
interest there between the members that belong to both? 

MR. CONLON: Senator, I had the same reaction you 
did: was there a conflict here? And I took this matter to our 
attorney, who is with us here today, and I asked him to look at 
this and let me know whether he felt it was a conflict. Because 
if it is, I think we need to put PERS on notice that in spite of 
the fact that we don't have any jurisdiction over PERS, that the 
employees of the Commission, some of which are — have been 
employees for many years so they have large investments in their 
future retirements, so I — 

SENATOR AYALA: The attorney said there was no 
conflict? 

MR. CONLON: No. I just asked him to look at it. 

SENATOR AYALA: They haven't responded to you yet? 

MR. CONLON: No. Peter Arth, I just met with him two 



49 

days ago on this point, and he has not had a chance to respond. 

SENATOR AYALA: What is your general opinion of this 
investment by PERS? 

MR. CONLON: Well, I think — 

SENATOR AYALA: It went outside of the regulatory 
waves of investment; they thought it would be a better way of 
doing it, but it's kind of risky when they do that. 

MR. CONLON: I don't think that I'm in a position to 
judge the reasonableness of their investment. 

My only concern was that it may be a conflict if our 
employees are in proceedings where ENRON is a party, and those 
same employees have large investments in PERS, or a large 
interest in PERS. So, I did ask the attorney to look at that 
and give us advice on what to do. So, that is in the mill, and 
I just met with him two days ago on that point. 

SENATOR AYALA: We're told that ENRON gas service is 
the largest buyer and seller of natural gas in North America, so 
it's no small company. 

Are you telling me some of the members of the PUC are 
also members of PERS? Did you establish that? 

MR. CONLON: I'm only ~ and I'm a new state 
employee, at least temporarily, so I'm not familiar with PERS. 

When you say a "member", I assume you mean that 
people are subject to pensions from the PERS, or are you talking 
about their board? 

SENATOR AYALA: I'm talking about the board members. 
I'm not so sure that members by themselves could be making all 
the dealing and wheeling. It would have to be the Board of 



50 

PERS. 

MR. CONLON: I don't think we have any members that 
are on the PERS Board. No, we do not. 

SENATOR AYALA: So, you see no problem generally with 
that kind of an investment by PERS into -- 

MR. CONLON: No, I'm not judging it from a business 
standpoint. 

I'm just saying I'm concerned enough to ask the 
attorney whether there's a conflict of interest issue that we 
ought to address, and that's what I've asked. 

SENATOR AYALA: Do you think we ought to find out? 

MR. CONLON: Yes. 

SENATOR AYALA: Would you give us the opinion of the 
attorney when he gives it — 

MR. CONLON: Yes, I'll share that with you. 

SENATOR AYALA: You and I discussed at great length 
the tremendous amount of paperwork required for highway carrier 
permits. It doesn't make sense to the lay person, but 
apparently they think that there's a need for all this paperwork 
of duplicative, unnecessary, in our opinion, statutory, 
regulatory information. 

You tell me in your letter to me that you are looking 
into that, and you will continue to examine our requirements to 
determine whether they are unnecessary or duplicative 
information requests that could be removed to help simplify. 

Are on top of that? 

MR. CONLON: Well, I met with Bill Schulte, who's 
here with me today who's in charge of our transportation group, 



51 

and he has informed me that in spite of the fact that there is a 
lot of paperwork — I'm not denying that — that the industry 
has generally been supportive of the changes that were made, and 
that they do perceive them as being streamlined. 

Now, I think that your constituent does not agree 
with that, but I think as the industry, that's the impression 
we're getting. 

SENATOR AYALA: Well, it's normal for those who are 
in to make it tough for anybody to get in, you see. They 
protect themselves that way, and the heck with everybody else. 

I don't think it's fair to say the industry supports 
it. Well, of course they do. They're already in. But if they 
were starting from scratch, I'm sure they wouldn't be so 
enthused about a stack this high of information that, in terms 
of lay people, is not really necessary. 

I just wonder if you will continue to look and let us 
know where we can — some of it ' s statutes required by the 
state. Can't we find out how to streamline that process, and 
maybe you can give us information on how to do that and we ' d 
delete some of the — they're duplicating. 

MR. CONLON: I will personally look at that and look 
at the paperwork myself and form my own judgments and get back 
to you, Senator, with my judgment. Right now, I'm relying on 
the staff. 

SENATOR AYALA: Would you do that, because, you know, 
before someone can start a little business, he's got to have ten 
attorneys to find out what the PUC wants. 

And again, sure, industry supports it. They're in; 



52 

why shouldn't they support it? They don't have to put up with 
the tremendous amount of paperwork and deleting some of the 
competition, perhaps, they don't like. 

But if you will stay on top of that, and let me know 
how we can streamline that so we can remove some of this useless 
information. Really, it doesn't do anything that you should be 
required. Would you do that for me? 

MR. CONLON: I certainly will. 

SENATOR AYALA: Thank you. 

SENATOR CRAVEN: Senator Petris . 

SENATOR PETRIS: Thank you, Mr. Chairman. I'll be 
brief. 

I am interested in the independence question. 

MR. CONLON: Yes. 

SENATOR PETRIS: One of the witnesses, President of 
the Association, and we also have a letter. 

The clients you had you served in an auditing 
capacity. 

MR. CONLON: Yes. 

SENATOR PETRIS: You weren't the bookkeeper who did 
their daily work. 

MR. CONLON: No. 

SENATOR PETRIS: You came in and audited them. 

MR. CONLON: Right. And we issued the financial 
statements required by the SEC to the public to issue debt and 
common stock offerings. 

SENATOR PETRIS: Will you continue to do that while 
on the PUC? 



53 

MR. CONLON: No, I retired from Arthur Anderson in 
'91, and as Ms. Janice Wilson said, I — my last in-charge SEC 
client was 1987. 

SENATOR PETRIS: I think there's a mistake on your 
background sheet here. It says you were licensed to become a 
CPA in '91. Is that correct? 

MR. CONLON: I retired in '91. I think that's an 
error. I retired in '91, and I apologize. 

SENATOR PETRIS: It says: State of California 
Certified Public Accounted, date issued — this is under "List 
Professional Licenses and Certificates. Obviously a typo — it 
says April 1, 1991. That's probably when this paper was 
written. 

But anyway, that's not correct. 

MR. CONLON: That's not correct. 

SENATOR PETRIS: Well, it piqued my interest, because 
I thought if you'd been in accounting all these years and didn't 
take the exam — 

MR. CONLON: No, my exam — my certificate is on the 
wall, and I think it's 1972. 

SENATOR PETRIS: Because as a lawyer, I'd hate to 
have taken the Bar exam as late as '91. 

[Laughter. ] 

SENATOR PETRIS: About 50 years after I got out of 
school . 

So, I'm glad that that's a mistake. 

I'm interested in the independence thing. I don't 
see any comments relating to your knowledge of or contact with 



54 

consumers and consumers' rights organizations and where they're 
coming from. You're going to see a lot of that at the PUC; you 
undoubtedly have . 

MR. CONLON: I have. 

SENATOR PETRIS: It's interesting that TURN is not 
here to oppose you. They're not supporting you, but at least 
they're not in opposition. Sometimes, they come in and oppose 
nominees for this . 

Do you have any contact with them? 

MR. CONLON: Yes, I've had quite a bit of contact 
with them. I was fortunate enough to come on the Commission and 
go to two seminars for the Legislature, actually, one of them 
for the CFE, the California Foundation of Energy and what have 
you. But TURN was there; Mike Folio was there for two days. 
And then again another one — the first one was on the electric 
industry and the second was on the gas industry, and TURN was 
represented at both of those. 

I met with TURN in my office on two different 
occasions: one on gas and one on telecommunication. So that, I 
think that I have established a rapport with them, and I hope 
that they believe that I'm going to be fair and give a balanced 
approach to my responsibilities. And I hope that their evidence 
of not being here is indicative of that. 

SENATOR PETRIS: I would agree. I think we have to 
assume that, as a minimum, they would assume that you'd be fair, 
or they'd be in here telling us you're unfair — 

MR. CONLON: Right. 

SENATOR PETRIS: — based on whatever voting record 



55 

you have up to now . 

You don't feel that your exclusive contact in a 
professional way with the utility people, as opposed to a 
consumer group, is going to make you less objective in 
considering consumer interests in the many decisions the PUC 
makes regarding rates and so forth? 

MR. CONLON: I understand the question. 

I think that, you know, as a professional accountant, 
being independent is part — for 30 years, that I will be an 
independent Commissioner for six years and make sure that my 
approach and my conclusions are unbiased and balanced in their 
result. 

SENATOR PETRIS: I think that's more significant than 
usual because of a couple of Supreme Court decisions we've had 
lately. One of them takes your folks off the hook when they're 
rendering an opinion relating to an analysis of a company and 
the stock. For example, they used to be accountable to a third 
party, like me, a buyer. I'm not a client, but I look over 
reports on stocks that the CPAs do, reports on companies, and I 
find one that's affirmative and positive, and I buy the stock, 
and it turns out there's a big, bad error in that, I used to be 
able to sue the accountant directly because I did rely on their 
report . 

The Supreme Court of California has now removed that 
and said, unless you have privity — meaning being a client, I 
suppose, or a customer of some kind — you're not eligible any 
more . 

That disturbs me, because it removes another step of 



56 

accountability from the profession. They're less accountable. 

Now comes the same Supreme Court and says, "We're not 
going to hear appeals from rulings of the PUC any more." 

Now, a lot of those rulings, if they're on rate 
making, rely heavily on the analysis of accountants, both 
in-house and out. Consumer groups have their accountants, you 
know; the utility has its accountants. So, they've been 
relieved of liability in one kind of situation, and now it's 
being compounded by the fact that if the consumer doesn't make 
it at the PUC level, that's the end of the trail. Whereas in 
the past, they could go to the Supreme Court. This Court, for 
some reason, has just said "No, we're not going to." Maybe 
they're overworked, or something. They're not taking any more 
appeals from the PUC. 

That increases the burden on you as a member to make 
sure that the consumers' interest, as well as everybody else's, 
is carefully guarded because it's the end of the road. 

Do you want to comment on that? 

MR. CONLON: Well, I think that I understand the 
responsibility, that we do have very important decisions to make 
in each case, and that we can't exercise a bias one way or the 
other. 

And I assure you that, based on my limited record and 
my track record as an independent accountant, that I'll call 
them as I see them, and I will be unbiased. And I understand 
the interest of the consumer and the rate payer as being very 
important, and I will respect that and consider it. 

SENATOR PETRIS: Do you happen to know — I didn't 



57 

read the decision. I don't know if it was actually a decision; 
it's just a policy of the Court that's rejecting all appeals. 
Do you happen -- 

MR. CONLON: I'm not familiar with that. 

SENATOR PETRIS: Have there been discussions of that 
at all in the PUC meetings? 

MR. CONLON: Not in the time that I've been there. 

SENATOR PETRIS: Can anybody else help me on that? 

MR. CONLON: Peter; he's our General Counsel, Peter 



Arth. 



time? 



SENATOR PETRIS: Do you reject his advice 5% of the 



[Laughter. ] 

MR. ARTH: I very much enjoyed that line of 
questioning, Senator. I hope Greg listened closely. 

That's news to us . I mean, you can look at the rate 
of the California Supreme Court taking discretionary appeals -- 
they haven't taken one recently -- and perhaps reach that 
conclusion, but there's nothing they've announced. And we 
obviously consider them as still looking closely over our 
shoulder in terms of Writs of Review for Commission decisions. 

SENATOR PETRIS: I have a staff note here that says 
under the law, the Supreme Court is the only one with the 
jurisdiction to take — 

MR. ARTH: And that's correct. 

SENATOR PETRIS: — take appeals. But then it says 
that there 've been complaints that the Supreme Court has failed 
to give enough attention to reviewing significant issues that 



58 

should have been reviewed that came out of a PUC ruling, which 
were appealed but were rejected by the Court. And as a result, 
Senator Roberti, our Chairman, carried a bill to enlarge that 
and have the Appellate, the next tier, get jurisdiction. The 
Governor vetoed it . 

So, it looks to me like we're being hammered here by 
the Court in different areas to the detriment of the consumer. 
It's the way I read it in all three either decisions or policy 
making. 

MR. ARTH: I think one positive aspect of that 
legislative effort, and this was a topic when now-President 
Fessler was here for confirmation, is that there is an 
intermediate step. It's an internal appellate process where a 
party files a petition for rehearing with the Commission. 

It used to be that the decisions the Commission 
issued were in the vein of a one-liner: "We've looked at 
everything; we herein deny. " 

A reform that Commissioner Fessler asked us to invest 
in, and we have, is to make the decision on rehearing look like 
an appellate decision. I think that's been helpful to the 
California Supreme Court. The parties have universally said, 
"We now appreciate getting your thinking. " 

SENATOR PETRIS: Would that be why they're not taking 
as many appeals? 

MR. ARTH: It might be. The historic volume has been 
about the same, but I think our decisions on rehearing are far 
better now, and we've actually had parties who supported Senator 
Roberti ' s bill saying, "We're now satisfied." 



59 

SENATOR PETRIS: On the major issues, major 
decisions, that the Court has been rendering in the past five 
years or so, have they all been published, or are there de- 
publication orders on some of the significant ones? 

MR. ARTH: For the PUC, because we only get them from 
the California Supreme Court, we have one published decision, I 
think, in that last three years on attorney-client privilege. 

SENATOR PETRIS: That's all? One published or de- 
certified? 

MR. ARTH: No, one decision, period, and it was 
published. 

SENATOR PETRIS: You've only had one in three years. 

MR. ARTH: Yes. 

SENATOR PETRIS: Thank you. 

SENATOR CRAVEN: If there be no objection, I'd like 
to call a ten-minute recess. 

[Thereupon a brief recess was taken.] 

CHAIRMAN ROBERTI: The Committee will reconvene. 

Senator Rosenthal has joined us, the Chairman of the 
Senate Energy and Public Utilities Committee. Senator 
Rosenthal, you'd like to ask some questions? 

SENATOR ROSENTHAL: Thank you very much, gentlemen. 

The PUC, of course, deals with a number of issues 
that are paramount in the Energy and Public Utilities Committee 
of the Senate, which I Chair, and so let me ask you a couple of 
questions . 

The PUC has held a number of hearings on 
telecommunications infrastructure issues; three of them, as a 



60 

matter of fact, throughout the state, one of which I 
participated in the other day. And you may not have a final 
opinion yet on the subject matter, but I'd just get some of your 
thinking on how best to meet California's needs in this area of 
telecommunications infrastructure . 

MR. CONLON: Yes, Senator. 

We've had three hearings: one in Sacramento, and one 
in Pasadena, and one in San Francisco. I think they've been 
very enlightening. 

I've been very fortunate to come on the Commission 
right before they've had these hearings, as compared to somebody 
that comes on, you know, in the next couple of months; it's 
going to be unfortunate. 

But I believe that they've defined the needs fairly 
well in the second session. I think the session last week up 
here in Sacramento, there was a lot of consensus felt by the 
participants, which, you know, I'm not sure that I fully 
understood the magnitude of that consensus, but I think that 
there was a consensus that there needed to be some standards of 
inter-operatability and inter-connectability . And those terms 
are — I know they're buzz words in the industry, but so that 
the systems work between various providers, for the people that 
are not familiar with the industry. Just — and the Commission 
needs to be able to set the standards so that the networks, the 
various networks — and I think there was a consensus that 
there'll probably be more than one network. You've got the 
cable companies, and the local exchange companies, and the 
private carriers — so, there'll be a number of networks. And I 



61 

think the Commission, everyone was encouraging us to make sure 
that they all worked; that they could interconnect, and that 
they could communicate between each other. 

So, and I think we have a hearing going on the — 
it's called the ONA, which is kind of a first step in freeing up 
the local exchange companies to provide other providers to come 
in and use of their equipment. 

So, I think it was very encouraging, because I think 
what we need is some kind of a vision. And one of the parties 
said, "We'll keep it simple," and so it's something that can be 
implemented. And I think universal service probably needs to be 
addressed again as to what that means in this new technology. 

And I know that your comments regarding the schools 
was certainly one that I share with my working with schools in 
the last two years; that somehow, there's a public good 
responsibility to fund technology for the schools, and the 
libraries, and the community centers, and the hospitals. So, 
there wasn't any consensus on how to do that, but I think 
there's definitely a great need to do it. And I know your bill 
is in that direction, so I certainly support that effort. But 
how to fund it is going to be the bottom-line question. 

So, but I think those are the general comments I 
have. In the next six weeks, we will go through a process at 
the Commission that should pull our comments together and get a 
consensus, and then we'll issue our report, hopefully, in the 
early fall. 

SENATOR ROSENTHAL: Very good. 

The next subject matter is one of the state's 



62 

electric services industry. I'd like to kind of get your idea, 
briefly, of the vision of the future. Do you see a more 
competitive environment? I have a personal interest in electric 
vehicles as being the direction that we ought to be moving 
toward the future. 

Comment? 

MR. CONLON: Well, again, I've been very fortunate in 
my timing because there's been three hearings in this regard; 
open hearings in the electric industry. And the staff has 
developed this yellow book, which I think is a seminal piece of 
work on analyzing the industries, what the issues are, and what 
needs to be addressed. So, these hearings plus this report that 
the staff issued are going to allow us to try to and create a 
vision, if you will, for the electric industry. 

And competition is really the economic force that's 
happening. I mean, there's — you know, we can do so much, but 
I think in the long run, the economics of free competition in 
electric generation are going to make things happen. And if 
they don't, then the federal government's going to step in and 
probably make it happen. 

So, we need to help and figure out a vision that 
makes sense for California and do it first, before the federal 
government comes in and does it to us, so to speak. So, that's 
my thought on that. 

SENATOR ROSENTHAL: I have a lot of good feelings 
about the PUC . However, not all wisdom resides there. In fact, 
often we in the Legislature propose some new directions for the 
Commission. 



63 

What is your view on the relationship between the PUC 
and the Legislature, and what do you think can be done to 
improve that relationship? 

MR. CONLON: Well, I think that the issue both in the 
two that we talked about — telecommunication and the electric 
industry -- the changes are going to be so dramatic that the 
Commission itself cannot do it. I think we're going to have to 
get legislative support and to get legislative changes, because 
without those legislative changes, I think the changes that are 
going to be recommended will not — I don't think we'll have the 
ability and the power to do it. 

So, I think that we need to work together to create 
both of these industries and to lead California out of some of 
the economic problems that we're suffering from right now. And 
I just think that it's a must that we work together. 

As far as the mechanics on how to do it, as the new 
kid on the block, I'm not sure how to do that. But I'm hoping 
that just one-on-one discussion with each of the key players at 
the Legislature will be a first step, and I hope we'll get some 
legislation that would help it -- help make it happen. 

SENATOR ROSENTHAL: And finally, my only comment 
would be that in the short period of time that you've been on 
the Commission, it's my feeling that you've done a good job, and 
that you're thoughtful, and that you look at all sides. And I 
think that you make a fine Commissioner. 

MR. CONLON: Thank you very much, Senator. I 
appreciate that very much. 

SENATOR ROSENTHAL: Thank you, Mr. President. 



64 

CHAIRMAN ROBERTI: Thank you, Senator. 

Senator Petris . 

SENATOR PETRIS: Sorry to go a second round. 

I wanted to ask earlier about the Commission's role 
in helping protect the environment and improve it, and of 
course, Senator Rosenthal went into that electric. And you may 
have answered this earlier when I was out. 

When the Clean Air people made their very tough 
announcement that there had to be a certain percentage of 
automobiles powered by electricity by the end of this century, 
were their staffs conferring with your staffs on this to see 
about any problems that might arise, any obstacles, or get the 
active support of the experts on your staff? 

MR. CONLON: I have no personal knowledge. That 
happened before I came on the Commission, so I just don't have 
any personal knowledge . There ' s probably people in the audience 
here, if you want to try. 

SENATOR PETRIS: I guess the question is, is there 
intercommunication now between your staff and theirs regarding, 
perhaps, the capacity to do this? If we go all electric, we 
have to have a lot of charging stations, and so forth. How is 
that going to affect our capacity to provide the electricity? 

Are you going into those problems? 

MR. ARTH: Yes, we basically are part of a trilogy 
with the State Energy Commission and the State Air Resources 
Board. Our task was to put a dollar value on emissions, and in 
that way try to help move the state between — you know, from 
where they've been with cheap fossil plants to the best 



65 

environmentally sound choices. And in helping us set a dollar 
value on NOX and other emissions, we worked with the State Air 
Resources Board, the South Coast District, and we did work 
closely together. 

SENATOR PETRIS: The role of government was mentioned 
in connection with this whole area. 

I had bills years ago, in the '60s, several different 
bills pointing toward electric cars. They didn't pan out. One 
of them I got out of Popular Mechanics , which showed a picture 
of electric cars going down the highway being drawn by a magnet 
embedded in the road, controlled from a central source. The 
spacing between cars was controlled, the speed, and it was 
touted not only as good for the environment but an improvement 
in safety. 

We may eventually get to that. I don't know how 
practical it is now. 

I'm wondering if the PUC policy is to have the staff 
examining various options that we might want to consider as part 
of the overall view that the Legislature is taking, so we don't 
just concentrate on, well, let's build a lot of electric cars. 
There are different kinds of cars and different ways to do it. 

I had another bill that drew a circle around every 
city of 250,000 or more. It wouldn't let any internal 
combustion engines penetrate that circle, except for police and 
fire. The rest of us would use a golf cart, a modified golf 
cart, activated by a credit card. You just get in the golf cart 
after you've parked your car outside somewhere and go into town, 
and at the end of the day or end of your shopping, you get 



66 

another golf cart. And you're billed each month for the use of 
it. 

I think we ought to dust off some of those ideas and 
take a good look at them. 

MR. ARTH: I think you were ahead of your time. Your 
views are going to get vindicated in the next few years . 

SENATOR PETRIS: I hope I'm still around. 

MR. CONLON: I think President Fessler and Senator 
Rosenthal are very interested — very much interested in those 
subjects, so you can rest assured that they will pursue it, I 
think, and I will support them in that effort. 

SENATOR PETRIS: Thank you. 

CHAIRMAN ROBERTI: Any further discussion? 

Is there anyone here either in support, opposition, 
or with observations? There aren't any. 

SENATOR CRAVEN: Move. 

CHAIRMAN ROBERTI: Senator Craven moves the 
confirmation of Mr. Conlon be recommended to the Floor. 

Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Robert i. 



67 

CHAIRMAN ROBERTI: Aye. 

The vote is five to zero; confirmation's recommended 
to the Floor. 

Congratulations . 

MR. CONLON: Thank you very much, gentlemen. 

[Thereupon this portion of the 

Senate Rules Committee hearing 

was terminated at approximately 

4:12 P.M. ] 

— 00O00 — 



68 
CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand 
this / 3- ~~ day of July, 1993. 




^-^EVELYN J. MIZAK 
Shorthand Reporter 



235-R 

Additional copies of this publication may be purchased for $5.50 per copy 
plus 7.75% California sales tax. 

Senate Publications 

11 00 J Street, Room B- 15 

Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 235-R when ordering. 



^ 



HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




I 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

WEDNESDAY, JULY 14,1993 
2:05 P.M. 



I 



DOCUMENTS DEPT. 

AUG 2 7 1993 

S^N FRAMC39CO 
PU3UC UttWAHY 



236-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, JULY 14, 199 3 
2:05 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM CRAVEN, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR ROBERT BEVERLY 

SENATOR NICHOLAS PETRIS 

MEMBERS ABSENT 

SENATOR DAVID ROBERTI, Chair 

STAFF PRESENT 

CLIFF BERG, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

ALFRED R. VILLALOBOS, Member 
State Personnel Board 

ASSEMBLYMAN RICHARD POLANCO 

SAEED M. ALI 

Community College Educators of New Californians 

LES TREECE-SINCLAIR, Co-Chair 
California Coalition of Minorities, 
Women and the Disabled 

ROBERT SIFUENTES, President 

Capitol City's Chapter 

Personnel Management Association of Aztlan 

FLORENCE SUSAN BOS, Member 
State Personnel Board 

BUD CARPENTER, President 
State Personnel Board 



Ill 



INDEX 



Page 



Proceedings 1 

Governor ' s Appointees : 

ALFRED R. VILLALOBOS, Member 

State Personnel Board 1 

Introduction and Support by 

ASSEMBLYMAN RICHARD POLANCO 1 

Background and Experience 3 

Questions by SENATOR PETRIS re: 

Underrepresentation of Hispanic 

Women in State Workforce 4 

Discussion of Policy Change in 

Minority Hiring 5 

Reason for Underrepresentation of 

Hispanics 6 

Ability to Do Job Effectively with 

Budget Cuts 7 

Budget Cuts in Key Progrms 7 

Expression of Fiscal Concerns to Governor 

by Board Members 8 

Questions by SENATOR AYALA re: 

Major Issues before Board Today 10 

General Views on Affirmative Action and 

Use of Quotas 10 

Drug Testing of State Employees 11 

Suggestions to Prevent Abuse of 

Drug Tests 11 

Definition of "Reasonable Pace" in 

Affirmative Action Goals 12 



IV 



INDEX (Continued^ 

Witness in Support: 

SAEED ALI 

California Community College Educators of 

New Californians 13 

Witnesses with Concerns t 

LES TREECE-SINCLAIR, Co-Chair 

California Coalition of Minorities, Women, 

and the Disbled 14 

ROBERT SIFUENTES, President 

Capitol City's Chapter 

Personnel Management Assocation of Aztlan 16 

Motion to Confirm 17 

Committee Action 17 

FLORENCE SUSAN BOS, Member 

State Personnel Board 18 

Introduction and Support by BUD CARPENTER 

President, State Personnel Board 18 

Background and Experience 19 

Questions by SENATOR AYALA re: 

General Views on Affirmative Action 20 

Drug Testing of State Employees 20 

Major Issue Facing Board Today 21 

Motion to Confirm 21 

Committee Action 22 

Termination of Proceedings 22 

Certificate of Reporter 2 3 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

SENATOR CRAVEN: We have one of our colleagues to 
make the presentation of a person who is going to be considered 
as a member of the State Personnel Board, Mr. Polanco. 

ASSEMBLYMAN POLANCO: Thank you, Mr. Chairman, 
Members . 

On March 18th, Governor Pete Wilson announced the 
appointment of Alfred Villalobos to the State Personnel Board. 
Mr. Villalobos has been a friend for several years. We are here 
today — Senator Art Torres was going to make the presentation; 
unfortunately, he is in committee currently. I'm here asking 
the Committee to support the confirmation and to give the 
opportunity for this confirmation to go through. 

Mr. Villalobos is a gentleman who has broad 
experience in the banking area. As a former California member 
of the Board of Banco Popular de Mexico — excuse, de Puerto 
Rico, he served and played an integral part in the development 
of the bank as well as the management of the bank. 

He went on and has demonstrated a sensitivity to the 
issues of the disabled by serving in the capacity in the East 
Los Angeles Regional Center of the Department of Disabled 
Disabilities Program. He brings to the State Personnel Board 
hands-on experience on the issues of employment, those issues 
that are important to the ever changing population of the state, 
the issues of diversity, opportunity of upward mobility for 
qualified candidates. He has demonstrated further his ongoing 
interest in civic duties as demonstrated and outlined in his 



resume . 

As you know, this is a very important appointment, 
not only to the State Board of Personnel, but Mr. Villalobos 
currently is a member of PERS . As a result of being appointed 
by the Governor to this post, there is a position that allows 
for Mr. Villalobos to also sit on PERS. In that capacity, he 
has brought an understanding of management, of finance, and real 
estate, and as we begin to diversify the opportunities from the 
PERS perspective, he is bringing a tremendous amount of hands-on 
knowledge and leadership. 

I'm here, in closing, Members, to ask this Committee 
to support the confirmation of a person who, in our community, 
has demonstrated sensitivity, leadership, and a commitment to 
making public service what it should be. 

With that I will close and, if it's appropriate, 
Mr. Chairman, I'd like to introduce to you the proposed nominee 
to the State Personnel Board, Mr. Al Villalobos. 

SENATOR CRAVEN: Thank you very much, Mr. Polanco. 
We appreciate the fact that you took the time to introduce this 
gentleman to us . 

He probably doesn't need too much introduction, to 
use sort of an old cliche, but first of all, the Rules Committee 
would like to congratulate you upon your recent selection as 
Deputy Mayor of the City of Los Angeles, which has a great 
meaning to all of us. 

And it seems, perhaps, somewhat extraneous when I 
then say to you, would you tell us now why you feel you're 
qualified for this job? But that's what we do regularly, so if 



you could give us a few words why, I think it would be 
appropriate. 

MR. VILLALOBOS: I would be happy to, Senators. 

For the last 25 years, I've been involved in 
business and as a volunteer member of several boards and 
commissions as various stages of government: local, state, and 
federal. I have served on the Western States Advisory Board for 
MANPOWER. I have served on numerous industry-wide committees 
that affect our workforce and the betterment of the workers. I 
presently serve on a couple of task forces basically involved 
with the upward mobility of our diversified population. 

As you know, in California our state is the most 
diversified of any state in the country. It is something I am 
very committed to personally. 

I also had the extraordinary experience of being an 
administrator several years back of a Regional Center for the 
Developmental ly Disabled, and I am much closer to that community 
than ever before. Since then, myself and my children have been 
volunteers in various organizations for developmental people, 
and it's something that I feel is very important, especially 
with the passing of the ADA Act last year. 

If you have any other questions, I'd certainly be 
happy to answer them. 

SENATOR CRAVEN: Fine, thank you very much, sir. 

Do any of the Members of the Committee have any 
questions of Mr. Villalobos? Senator Petris 

SENATOR PETRIS: I won't do it, but I'm tempted to 
ask if you've contributed to Mr. Polanco ' s campaign in the past. 



[Laughter. ] 

MR. VILLALOBOS: As a matter of fact, I have not. 

SENATOR PETRIS: The only other problem is, you're a 
banker, according to the criticisms we've had. 

[Laughter. ] 

SENATOR PETRIS: I'm concerned about information that 
we've received regarding a policy of the Personnel Board in the 
past few years, several years, relating to affirmative action 
and a fair representation in employment of Hispanic women. 
Specifically, we've been told that they were underrepresented 
substantially in a survey made a few years ago. I don't 
remember the percentages. And then, more recently, not only 
underrepresented in numbers, but also always in the lowest job 
categories . 

Now, we've gone over this in the Rules Committee time 
after time with respect to several of our state agencies. We've 
had a very able attorney, Mr. Torres, who's come in quite often 
to hammer at us to make sure we try to do something to improve 
that record in the various agencies. 

Now, it says here that in 15 years, hiring rates of 
African-American and Asian employees had outpaced parity, while 
hiring rates for Hispanic employees lags behind. In particular, 
Hispanic women continue to be hired into the lowest paying job 
categories. There's actually been a decline in the rate of 
hiring in the same occupational categories. 

The first study I referred to was done in 1976, and 
it seems that things haven't improved much since then. 

Now, I don't know how long you've been on the Board. 



MR. VILLALOBOS: Four months. 

SENATOR PETRIS: So, you haven't had a chance to turn 
that around, if you were inclined. 

Has any of this come to your attention in the short 
time you've been on the Board? 

MR. VILLALOBOS: Yes, sir, it has. In fact, I 
reviewed our affirmative action plan. And quite frankly, I have 
concerns in that regard as well, and I plan to bring certain 
ideas to the Board at our subsequent meeting. 

I've already brought things before the Board that the 
Board has been very helpful in listening to. They are certainly 
not adverse to trying new things and experimenting. In fact, 
several of the Board members have told me from to time that they 
would like to do a demonstration project if it would help 
improve our situation. 

SENATOR PETRIS: Does that mean that your review 
leads you to the same conclusions as the report I've just cited? 

MR. VILLALOBOS: Yes. 

SENATOR PETRIS: That there's a lot of 
underrepresentation and underpayment as well? 

MR. VILLALOBOS: Yes, there is. And I feel that that 
has to be improved, and I'm committed to that improvement. 

SENATOR PETRIS: There's a discussion of a policy 
change. I don't know whether it's actually been done. It's a 
policy to change the definition of the base against which 
minority hiring is measured from a representation in the general 
labor market to relevant labor market. 

It seems to me that narrows the base enormously. Are 



you in favor of going in that direction? 

MR. VILLALOBOS: Actually, we just had a substantial 
discussion on that regard, and the Board voted unanimously to 
postpone indefinitely any further discussions because we don't 
think it's warranted at this time. 

SENATOR PETRIS: I see. Was that recently? 

MR. VILLALOBOS: Yes, it was the last Board meeting, 

SENATOR PETRIS: I guess if it's a unanimous vote it 
includes yours? 

MR. VILLALOBOS: That's right. 

SENATOR PETRIS: So what happens in the meantime? 
Anything? 

MR. VILLALOBOS: Well, the issues that were brought 
forth were more regarding whether or not we might have a legal 
problem based on some decisions that were made in other district 
courts. But since we have received nothing from the Ninth 
Circuit Court, which basically would affect us, we don't see any 
reason at this time to go forward regarding any changes . 

SENATOR PETRIS: In the meantime, you're working to 
improve the underrepresentation of Hispanic women? 

MR. VILLALOBOS: We need to. We need to be more 
aggressive. 

SENATOR PETRIS: Do you have information on why this 
is so? It could be there just aren't enough women applying. 
That's happened in the past, too. 

MR. VILLALOBOS: Well, the Board has formed a task 
force. As a matter of fact, they're going to report to us -- I 
believe it's either in September or October. We've asked them 



to get together with all the departments and analyze why these 
type of underrepresentations occur. And they're supposed to 
report back to us as to what they've discovered. 

SENATOR PETRIS: Now, in the budget cuts, the Agency 
has loss some of the managers who were responsible for 
monitoring affirmative action. With those cuts in place, you 
have less people trying to do the job. 

Do you still think it can be turned around with less 
people working on it? 

MR. VILLALOBOS: Well, budget cuts for this very 
small Board has been pretty brutal, as you know, in the figures, 
I think our General Fund allocation is something like around $7 
million, when at one time it was like $21 million. 

However, our staff is a very committed group of 
people, and they're working very hard to follow the directions 
of the Board. I have sensed no reluctance to follow whatever 
lead we wish to take in a particular area. 

And I assure you, if such a reluctance were to 
develop, I would be firmly against it. I have no problem 
pushing our employees to do what the Board wants to do. 

SENATOR PETRIS: Among those that suffered the cuts 
within the Department is the Career Opportunity Development 
Program. That had a lot of hope and promise when it started. 
That's been cut back severely. 

MR. VILLALOBOS: Yes. 

SENATOR PETRIS: It seems to me that and the other 
ones, the HELP program and the LEAP program for the disabled, 
those were all very substantially hit by the cuts. 



8 

Do they have enough people left to do the job, to be 
effective? 

MR. VILLALOBOS: Well, a little more money would 
certainly help, but the programs are not crippled. They are 
moving forward, and we certainly are pushing those programs. We 
think they've been extremely helpful. 

We have a hearing coming up regarding the LEAP 
program, which there are some major concerns about, and we're 
studying that at this point. 

SENATOR PETRIS: Do the Board members express their 
concerns directly to the Governor, or is that just done through 
the Chairman or through one person? 

MR. VILLALOBOS: No, we're independent. We can do 
whatever independently we wish to do, but only a majority can 
speak for the Board, and we have a Board President who speaks 
for that Board. 

But I've seen no reluctance of any Board members to 
speak out. I certainly feel that the five Board members today 
are an extremely independent group, and they certainly speak 
their minds on individual cases as well as public policy issues. 

SENATOR PETRIS: Does that include speaking to the 
Governor? 

MR. VILLALOBOS: As far as — I can only speak for 
myself. I have no problem speaking direct to the Governor on 
any issue, and I will do so, including issues that he and I may 
disagree on. 

SENATOR PETRIS: Have you asked him for more money? 

MR. VILLALOBOS: No. 



SENATOR PETRIS: Well, I can see why. It's kind of 
futile. The man has had a horrible problem. I'm not picking on 
him. He has very tough choices to make in cutting, but it 
shouldn't restrain us from asking. 

We in the Legislature ask him all the time. 

MR. VILLALOBOS: Actually, we were going to ask you 
for more money. 

[Laughter. ] 

SENATOR PETRIS: Well, that's part of it, but if you 
can make sure that it won't be vetoed when it gets to him, you 
know. 

I would recommend you work on the Governor. I mean, 
you have his confidence. He appointed you. He obviously holds 
you in high esteem. It's quite a distinction, out of all the 31 
million people in this state — they're not all eligible, but I 
mean, it's a big state — to be one of the very few appointed to 
a board of this kind. 

I would hope you would include among your 
conscientious duties the right to consult with the Governor when 
you think it's necessary to get help in that way. I would 
encourage you to do it. 

MR. VILLALOBOS: Well, Senator, if the Legislature in 
its wisdom were to raise our budget, I assure you that I 
personally would back such a thing, and I would speak directly 
to the Governor and write him on that. 

SENATOR PETRIS: I appreciate that, but the budget 
starts in the Governor's Office, so he hands it to us. So, if 
you could get it in there before he hands it to us, it would be 



10 

even better. Okay? 

MR. VILLALOBOS: Okay. 

SENATOR PETRIS: Thank you. 

SENATOR CRAVEN: Thank you very much. Senator Ayala 

SENATOR AYALA: Mr. Villalobos, what do you see as 
the most pressing major issues before the Board today? 

MR. VILLALOBOS: I would say that the new budget 
implementation certainly limits our resources to do our job. I 
think across state government, we may be faced with having to 
downsize departments and personnel requirements, and that's a 
very difficult thing. 

SENATOR AYALA: You feel fiscal matters are the most 
pressing? 

MR. VILLALOBOS: Well, the fiscal matters because of 
the lower revenue stream is really going to have an effect on 
personnel. It's also going to have an effect on those very 
positive program which we initiated, or the Legislature has 
initiated, which cost money to implement. 

SENATOR AYALA: What are your general views on 
affirmative action? Do you believe in quotas and all that good 
stuff? 

MR. VILLALOBOS: I don't believe in quotas per se, 
but I'm big supporter of affirmative action. I certainly have 
supported common sense goals for as long as I can remember. 
I've served on numerous affirmative action committees. I'm a 
big supporter of affirmative action. 

I believe that we've got to include our diversified 
population in every way we can. 



17 



11 

SENATOR AYALA: You don't support necessarily the 
quota system? 

MR. VILLALOBOS: No. 

SENATOR AYALA: What is your opinion on drug testing 
of employees? Do you have any reservations about that? 

MR. VILLALOBOS: When it comes to positions which 
involve public safety, I am a very firm supporter of drug 
testing, and I have so voted on several occasions when drug 
testing recommendations have come before our Board. I believe 
on many occasions, it's vital for the safety of the public. 

SENATOR AYALA: What would you like to see to prevent 
abuse of drug testing requirements? You know, protections for 
the rights of individuals . Do you have any suggestions along 
those lines? 

MR. VILLALOBOS: Well, it depends. First of all, in 
our process it's very important for the applicants to be honest 
and truthful and to disclose certain things. And in that 
process, if those disclosures are made, it eliminates the 
majority of the problems. 

In some areas where, for example, working electrical 
wiring, or driving a very large heavy equipment truck, working 
on a road, this involves more than that one individual. I 
believe in privacy to a very great extent, but when you're 
driving a school bus with 30 children, or when you're piloting 
an airplane, there's a big difference. 

SENATOR AYALA: All those people that are involved in 
public safety should be tested. 

MR. VILLALOBOS: Absolutely. 



12 

SENATOR AYALA: What kind of monitoring of testing, 
drug tests, do you think should be done by the state, if any? 

MR. VILLALOBOS: You know, I'm not familiar with the 
exact drug testing procedure, other than we have allowed drug 
testing of certain categories and positions. 

But if you like, I'd be happy to look into the 
details of what the actual drug test is. 

SENATOR AYALA: We're told that the use of the 
sanctions process is an adequate way to ensure that affirmative 
action goals are achieved at a, quote, "reasonable pace". 

What does that mean, "reasonable pace"? How do you 
describe that? 

MR. VILLALOBOS: Well, it all depends on who's 
describing "reasonable pace". We all have different opinions. 

SENATOR AYALA: I'm asking you. 

MR. VILLALOBOS: If it was up to me, I would have 
moved to fix things 20 years ago. We're behind the times, quite 
frankly. We need to up our involvement of certain diverse 
groups which are underrepresented. 

But as you know, we have a Civil Service system. One 
of my responsibilities is to protect that system, and we have to 
work within that system. And that's the way we're basically 
trying to achieve that goal . 

SENATOR AYALA: So, we're behind and we've got to 
catch up. 

MR. VILLALOBOS: Absolutely. 

SENATOR AYALA: Thank you. 

SENATOR CRAVEN: Very well. 






13 

Senator Beverly, you're the only other one. Do you 
have any comment at all? 

SENATOR BEVERLY: No comment. 

SENATOR CRAVEN: We thank you, Mr. Polanco. 

I was going to call for anyone in the audience, and I 
think that's what you're telling me. 

ASSEMBLYMAN POLANCO: Thank you very much, Senator. 

SENATOR CRAVEN: This must be Mr. Ali. Would you 
please come forward. 

MR. ALI: Mr. Chairman and Members of the Committee, 
my name is Saeed Ali. I represent California Community College 
Educators of New Calif ornians, an association of 17 community 
colleges in Southern California: Santa Barbara, Ventura, all 
nine colleges in Los Angeles, Cerritos, Santa Monica, Glendale, 
Pasadena, Long Beach, and Rancho Santiago. 

We're here in support of Mr. Villalobos for a number 
of reasons. Two of our reasons that were brought up in 
testimony, one regarding the inclusion of people we call New 
Calif ornians, immigrants into the state services. 

Currently, a significant underrepresentation exists 
for the population. One population that was noted was Latinas . 
We feel that the direction that Mr. Villalobos plans to take is 
one that we support. It's an equitable position. It's a 
position of fairness and encouragement. 

We on the supply side feel that with proper 
encouragement, without enormous changes in the current policies 
but with the proper encouragement and education, this new 
population will receive fair treatment and will become part of 



14 

our workforce. 

The second reason is that we have on record Mr. 
Villalobos's commitment to working with New Calif ornians . He 
has been enormously helpful over the past three years in helping 
us administer the amnesty education program that dealt with 1 . 6 
million people who were legalized through the IRCA process. 

So, we have a record, and his experience shows us 
that he will be fair, and he will give us equitable treatment. 

SENATOR CRAVEN: Thank you very much sir. 

Is there anyone else in the audience wishing to 
comment either way? Yes, sir, if you'd come forward, please, 
and state your name for the record. 

MR. TREECE-SINCLAIR: Mr. Chair, thank you. 

SENATOR CRAVEN: Yes, sir, you're welcome, sir. 

MR. TREECE-SINCLAIR: Members of the Committee, my 
name is Les Treece-Sinclair . I'm the Co-Chair of the California 
Coalition of Minorities, Women, and the Disabled, which is a 
coalition of the different state government advocate 
organizations, including: Black Advocates in State Service, 
BASS; APSEA, which is the Asian-Pacific Island State Employees 
Association; AISEC, the American Indian State Employees 
Association; CAFE, Calif ornians Advocates For Equity; and 
Disabled in State Service. 

The different member organizations of the California 
Coalition have asked if I would be here and offer a few comments 
today . 

We come here not in opposition to the appointment of 
Mr. Villalobos, but rather to reaffirm the Coalition's 






15 

commitment to a strong and effective Civil Service system; to 
reaffirm our commitment to work toward an effective equal 
opportunity/affirmative action program in this state. 

At the same time, we do need to state that we, too, 
have some concerns which were touched briefly upon by Senator 
Petris, some concerns of recent actions that had been considered 
by the State Personnel Board in the form of proposals that would 
have changed the basis for affirmative action goal setting. 

I'm pleased to hear that that proposal has been 
tabled indefinitely, but again, it has only been tabled. We 
certainly would like to see consideration that would lead to it 
being dropped altogether. 

It ' s not our purpose to be here today to discuss 
these points at great length, but there were other proposals 
that were part of that same package that will affect state 
employees who have disabilities. Some of the proposals are very 
positive, but others, frankly, will be detrimental. 

There are other issues that must be addressed, and 
they have been spoken to briefly: the viability of the State 
Personnel Board itself; the overall adequacy of its resources to 
do an effective job in terms of oversight responsibility with 
state agencies to make sure that they are indeed implementing 
the state's affirmative action program; the overall programmatic 
and philosophical commitment of the Board for the continuation 
of an affirmative action program. 

Again, we're very pleased to hear many of the 
comments from Mr. Villalobos. 

I would like to state to the Committee that the 



16 

Coalition of Minorities, Women and the Disabled extended an 
invitation to Mr. Villalobos and to Ms. Bos to meet with us 
prior to the confirmation hearings. Unfortunately, our 
schedules did not allow that to happen, but I'm also very 
pleased to report that they have indicated, again, that they 
would be very willing meet with us during the summer recess. It 
is an arrangement that, indeed, we will follow up on because we 
would like to discuss some of the concerns I just briefly 
mentioned in much more detail . 

Again, basically we are here to offer our support, 
our continued commitment to work with the State Personnel Board 
its staff, its members, to address concerns. And while we're 
here to be supportive today, we do not want to minimize the 
concerns that we have about the Board and some of its programs 
and its future viability. These are important issues, and we 
are pleased to see people of the caliber of Mr. Villalobos being 
appointed to help address those issues, and we welcome the 
opportunity to work with him in the future. 

Thank you. 

SENATOR CRAVEN: Thank you very much. 

Yes, sir. 

MR. SIFUENTES: Thank you very much. My name is 
Robert Sifuentes. I am President of Capitol City's Chapter of 
Personnel Management Association of Aztlan. 

PMAA is an association of human resource 
professionals dedicated to the enhancement of employment and 
economic opportunities for Latinos . 

We also are concerned about some of the main issues 



17 

that Mr. Treece-Sinclair has indicated this afternoon, and we 
also support his position and would look forward to working with 
the new members of the Board in trying to address some of the 
critical problems that are facing Hispanics and Latinos in 
seeking employment, and retention, and promotion within the 
State Civil Service system. 

Thank you very much. 

SENATOR CRAVEN: Thank you very much, sir. 

Anyone else who wishes to comment? There appears to 
be none. 

SENATOR AYALA: Mr. Chairman, I move that we 
recommend the confirmation of Mr. Villalobos as a member of the 
State Personnel Board. 

SENATOR CRAVEN: Senator Ayala moves. Call the roll, 
please. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 

Four to zero. 

SENATOR CRAVEN: Congratulations, the confirmation is 
to the Floor. Thank you both so very, very much. 

Ms. Bos, would you come up, please. Next we have 



18 

Florence Susan Bos, a member of the State Personnel Board. And 
she will be accompanied by Mr. Bud Carpenter, who, I'm sure, 
will introduce her. 

MR. CARPENTER: Yes, thank you, Mr. Chairman and 
Members of the Committee. 

My name is Bud Carpenter. I'm the current President 
of the State Personnel Board. 

I'm here to support the confirmation of Mrs. Bos. I 
first met Flos in San Francisco about a year and a half ago at 
San Francisco State University when a scholarship fund was being 
set up for her husband, Otto Bos. It was a very important 
meeting for both of us, my first time to meet her. But Clair 
Burgener, who was in her position at that time, also introduced 
us, and she took an interest in the work of the Board almost 
from that time on, when she knew Clair was going to go and she 
was in San Diego. So, she familiarized herself with our 
procedures, and she had a really good background in personnel, 
which her resume and she will tell you about now. 

She tends to be even more nervous than I am, and so 
she isn't really. She's very competent, very capable. I'm sure 
she can answer all your questions that you may have. 

Florence, if you'll go ahead now. 

SENATOR CRAVEN: You're among friends. 

MR. CARPENTER: Answer the main question that Senator 
Craven will ask. 

MS. BOS: Which is, why am I qualified. 

SENATOR CRAVEN: That's right, exactly. 

MS. BOS: I'm asking the question myself, okay. 



19 

Members of the Committee, thank you for this 
opportunity to discuss my appointment to the State Personnel 
Board. I believe my background in both the public and private 
sector will serve me well in this position. 

To begin with, I have a Bachelor of Arts Degree in 
Public Administration with an emphasis in Personnel Management 
conferred with distinction from San Diego State University. In 
addition, I served with the Administrator for Management 
Services in the U.S. Department of Education. During this time, 
I was able to work in and observe operations of a governmental 
organization. 

In previous service with Aztec Shops at San Diego 
State University, I managed the personnel system for this 
enterprise. This gave me direct exposure to the establishment 
of job classification systems, one of the responsibilities of 
the State Personnel Board, as well as all aspects of 
establishing and managing a personnel system in order to obtain, 
utilize, and develop human resources. 

In my current role as the Director of the San Diego 
State University Elder Hostel, I have had to utilize my 
expertise to deal with the duties of a personnel administrator 
as well as the day-to-day management issues facing a director of 
a self -funded college for seniors program. 

I believe I'm ready to assume the responsibilities as 
a member of the State Personnel Board. According to its 
President, I have served with distinction for the past six 
months. I take my responsibilities very seriously and have 
done so even prior to my appointment. At that time I had the 



20 

privilege and pleasure to work with Clair Burgener in 
preparation for my appointment in January of 1993. 

The work since then has been voluminous and focused, 
challenging and interesting, and I would be honored to receive 
your vote of confidence for this position. 

Thank you . 

SENATOR CRAVEN: Thank you very much. 

Anyone have any questions of Ms. Bos? Looks like you 
just took them by storm. 

SENATOR AYALA: I'd like to ask you the same 
questions — 

SENATOR CRAVEN: Yes, Senator Ayala has something. 

SENATOR AYALA: — I asked Mr. Villalobos. 

What are your general views on affirmative action? 
How do you think it should work, and is it working? 

MS. BOS: I believe that it is working. 

SENATOR AYALA: You believe it's working? 

MS. BOS: We have a ways to go yet, but it is 
working. 

SENATOR AYALA: You don't support a quota system -- 

MS. BOS: No. 

SENATOR AYALA: — for minorities 

MS. BOS: No, goals, not quotas. 

SENATOR AYALA: And what is your opinion on drug 
tests of employees, state employees? What can we do to make 
sure we prevent the abuse of testing requirements? 

MS. BOS: Well, I would agree with what Al Villalobos 
said, that I think it's important — 



21 

SENATOR AYALA: I'm sorry? 

MS. BOS: I would agree with what member Al 
Villalobos just said. I think it's important for public safety 
personnel to be drug tested and any state employees who work 
where it may be unsafe for them to be involved with drugs . 

SENATOR AYALA: Do you feel that these employees that 
are involved with the safety of people should be tested? 

MS . BOS : Yes . 

SENATOR AYALA: What do you think is the major issue 
facing the Board today, or issues? 

MS. BOS: Well, I guess the main one is how to 
survive on such a small budget, and how to do the job that we're 
supposed to do. That's really a challenge. 

SENATOR AYALA: You feel like Mr. Villalobos, that 
fiscal matters of today are causing a problem for the 
functioning of your department? 

MS. BOS: Yes, I do. 

SENATOR AYALA: Thank you. 

SENATOR CRAVEN: Very good, anyone else? 

I don't think there's anyone else from the audience, 
is there? There appears to be none. 

SENATOR BEVERLY: I move we recommend confirmation. 

SENATOR CRAVEN: Very well, Senator Beverly moves. 

Would you call the roll, please. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 



22 



SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 

Four to zero. 

SENATOR CRAVEN: To the Floor. 

MR. CARPENTER: Thank you very much, gentlemen. 

SENATOR CRAVEN: Congratulations. 

[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
3:03 P.M.] 

--00O00 — 



23 

CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

u/ IN WITNESS WHEREOF, I have hereunto set my hand 
this / 3 day of July, 1993. 




J. KIZA 




x 

*£>£_ 



. E.VELYN 'J . niZAK 
Shorthand Reporter 



236-R 

Additional copies of this publication may be purchased for $4.50 per copy 
plus 7.75% California sales tax. 

Senate Publications 

11 00 J Street, Room B- 15 

Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 236-R when ordering. 






y 



HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

WEDNESDAY, AUGUST 18, 1993 
2:10 P.M. 



DOCUMENTS DEPT. 

AUG 2 7 1993 

SAN FRANCISCO 
PUBUC UEttAWY 






SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, AUGUST 18, 199 3 
2:10 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 
MEMBERS PRESENT 
SENATOR DAVID ROBERTI , Chair 
SENATOR WILLIAM CRAVEN, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR ROBERT BEVERLY 
SENATOR NICHOLAS PETRIS 

STAFF PRESENT 

CLIFF BERG, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

DONALD L. NOVEY, Member 
Industrial Welfare Commission 

SUSANN WILLIAMS-BLAIR, Member 
Public Employment Relations Board 



Ill 



INDEX 



Page 



Proceedings 1 

Governor's Appointees: 

DONALD L. NOVEY, Member 

Industrial Welfare Commission 1 

Background and Experience 1 

Questions by SENATOR AYALA re: 

Career Preparation for Present Position 

on Commission 2 

Interpretation of Commission's Mission 2 

Major Issues before Commission Today 2 

Aspects of California's Labor Conditions 

IWC Should Review or Act Upon 3 

Motion to Confirm 3 

Committee Action 4 

SUSANN WILLIAMS-BLAIR, Member 

Public Employment Relations Board 4 

Background and Experience 4 

Motion to Confirm 5 

Committee Action 6 

Termination of Proceedings 6 

Certificate of Reporter 7 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN ROBERTI: Mr. Novey has very patiently been 
waiting, so please come forward, appointee of the Governor to 
the Industrial Welfare Commission. 

We all know you well, but you might tell us why you 
feel you're qualified to assume this position. I think you're 
the labor representative, are you? 

MR. NOVEY: That's correct, Senator Roberti. 

Members of the Committee, I'm Don Novey, State 
President of CCPOA, California Correctional Peace Officers 
Association. 

September 29th is the birthday of Lech Walesa, and 
I'd like to see, maybe, a resolution on his behalf in the State 
Legislature as well. He's a well-known labor leader who's an 
inspiration to myself. 

I know we also have had some great Greek labor 
leaders out of the Bay Area, but this is something that's been 
near and dear to my heart for many years, and I've never sought 
an appointment that I would receive remuneration for, and I 
don't think I ever will. 

The labor climate is quite difficult in the United 
States and in the State of California. Just me being up here is 
probably reflective of the labor climate going to the bottom of 
the barrel. With that in mind, I think I can do a good service 
for the labor people of the State of California, and I think 
I've reflected that with my presence on that Board presently and 
in the past eight months. 



CHAIRMAN ROBERTI: Thank you. Turn the barrel over, 
and you're at the top. 

SENATOR AYALA: Question. 

CHAIRMAN ROBERTI: Yes. 

SENATOR AYALA: Mr. Novey, you're a career 
correctional officer. 

MR. NOVEY: Unfortunately. 

SENATOR AYALA: How did that prepare you for this 
position? 

MR. NOVEY: It's a very good question, Senator Ayala. 

In 1973, approximately 20 years ago, before we had 
the Peace Officers Bill of Rights, I was asked to step forward 
for my fellow peace officers, male and female, on the line in 
reference to their representation. I've been doing it for the 
last 20 years. 

SENATOR AYALA: What is your interpretation of IWC ' s 
mission and your role as a member of that commission? 

MR. NOVEY: Of the Industrial Welfare Commission, 
sir? 

SENATOR AYALA: Yes. 

MR. NOVEY: Well, I think as a strong labor 
representative with a pragmatic view to the 21st Century, I know 
we're having some difficulty in reference to the economic 
climate in California, and I think there has to be a positive 
interaction between line labor and, of course, the management 
structure in the State of California. 

SENATOR AYALA: What are the major issues before that 
before today, in your opinion? 



MR. NOVEY: The major issue as of now, and we have 
one more hearing -- we're in our third hearing as of this Friday 
in San Francisco -- and that's the minimum wage issue. 

SENATOR AYALA: What aspects of the California labor 
conditions would you like to see the IWC review or act upon 
while you're a member of that commission? 

MR. NOVEY: Well, basically the minimum wage, I 
think, has to be addressed in the State of California. The 
minimum wage I think is the major concern, has been 
historically. 

The structure is very difficult in reference to our 
present economic climate. That has been testified to in our 
last two hearings within the last month. 

Senator Ayala, the minimum wage has risen in the last 
11 years approximately 90 cents in the State of California. And 
I think we also have to address that issue, and also understand 
the plight of business in the State of California. So 
therefore, I consider that the number one item we're facing at 
the Industrial Welfare Commission. 

SENATOR AYALA: I have no more questions, Mr. 



Chairman. 



do pass. 



CHAIRMAN ROBERTI: Thank you, Senator. 

Senator Petris . 

SENATOR PETRIS: Move. 

CHAIRMAN ROBERTI: Senator Petris moves confirmation 

Anybody else? Anybody here in opposition? 

Better call it while the going is good. Secretary 



will call the roll. 

SECRETARY WEBB: Senator Ayala. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 

CHAIRMAN ROBERTI: Aye. 

The vote is four to zero; confirmation is recommended 
to the Floor. 

MR. NOVEY: Thank you. 

CHAIRMAN ROBERTI: The next appointment is Susann 
Williams-Blair, Member of the Public Employment Relations Board. 

MS. WILLIAMS-BLAIR: Thank you. 

CHAIRMAN ROBERTI: We will ask you the same question 
we ask all the Governor's appointees, and that is why you feel 
you're qualified to assume this position? 

MS. WILLIAMS-BLAIR: Thank you, Mr. Chairman and 
Committee Members . 

First of all, I think talking about my interests and 
my qualifications go together. I'm particularly interested in 
the appointment to this particular board because my career has 
spanned more than 25 years in labor relations and the collective 
bargaining environment in government, both at the local level, 
state level, a quasi-local level, and then in private industry. 

An appointment to the board and to function in the 
neutral or impartial role on that board, I think, is, one, it's 



an honor to be asked. And it would allow me to pull together 
that more than 25 years of experience and apply it in a public 
policy role on the board, and I think I have, by my background, 
some unique experience to do that. 

In addition, my experience spans a fair amount of 
management, having been a deputy city manager in the City of San 
Diego, and a department head in various agencies. And I think 
that experience will serve me well on the board, as well as the 
present Chair designate as we basically attempt to live with the 
reduced resources. A year ago, more than an 18 percent budget 
reduction, and for this fiscal year, 15 percent. I think my 
experience and ability in managing change and being a problem 
solver will be — would allow me to contribute to the board and 
to the staff and the agency as a whole. 

So, I'd be very pleased for your favorable 
consideration as a board member of the Public Employment 
Relations Board. Certainly, I'm happy to answer any questions 
you may have. 

CHAIRMAN ROBERTI: Thank you very much. 

Is there any discussion or debate? 

Any opposition? 

SENATOR CRAVEN: Move. 

CHAIRMAN ROBERTI: Senator Craven moves the 
confirmation be recommended to the Floor. 

Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 



SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 
SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 
CHAIRMAN ROBERTI: Aye. 

The vote is five to zero; confirmation is recommended 
to the Floor. 

Thank you very much. 

MS. WILLIAMS-BLAIR: Thank you very much. 

[Thereupon this portion of the 

Senate Rules Committee hearing 

was terminated at approximately 

4:10 P.M. ] 

— 00O00 — 



CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 



as Jl 



jj IN WITNESS WHEREOF, I have hereunto set my hand 



this / / day of August, 1993. 




— p • c\ 




ELYN'J. yZZAK 
Shorthand Reporter 





s^ 



JL37-R. 



Additional copies of this publication may be purchased for $4.00 per copy 
plus 7.75% California sales tax. 

Senate Publications 

11 00 J Street, Room B- 15 

Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 227-R when ordering. 



HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 

WEDNESDAY, AUGUST 25, 1993 
4:15 P.M. 



DOCUMENTS DEPT. 

SEP 1 3 1993 

SAM FRANCISCO 
PUBUC LIBRAWY 



238-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 3191 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, AUGUST 25, 1993 
4:15 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 
MEMBERS PRESENT 
SENATOR DAVID ROBERTI , Chair 
SENATOR WILLIAM CRAVEN, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR ROBERT BEVERLY 
SENATOR NICHOLAS PETRIS 

STAFF PRESENT 
CLIFF BERG, Executive Officer 
PAT WEBB, Committee Secretary 
RICK ROLLENS, Consultant on Bill Referrals 
NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

SENATOR GARY HART 

PAUL M. RELIS, Member 

California Integrated Waste Management Board 

SENATOR TOM HAYDEN 

KATHY DRONENBURG, Member 
State Board of Education 

WILLIAM P. DUPLISSEA, Member 

Occupational Safety and Health Appeals Board 

CARL BRAKENSIEK 

California Society of Industrial Medicine 
and Surgery 



Ill 

INDEX 

Page 

Proceedings 1 

Governor ' s Appointees t 



PAUL M. RELIS, Member 

California Integrated Waste Management Board 1 

Introduction and Statement in Support by 

SENATOR GARY HART 1 

Background and Experience 3 

Statement by CHAIRMAN ROBERTI re: 

Committee Agenda 5 

Statements on Travel, Per Diem, and Office 7 

Questions by CHAIRMAN ROBERTI re: 

Original Headquarters in Santa Barbara 8 

Days Spent in Sacramento 9 

Questions by SENATOR AYALA re: 

Move to Change Travel and Per Diem 

Policy by Administration 9 

Statements by CHAIRMAN ROBERTI re: 

Problem with Everyone in State Government 

Living in Sacramento 10 

Statements by SENATOR TOM HAYDEN re: 

Total Expenses 11 

Attendance at Fundraiser 12 

Appointee's Environmental Qualifications ... 12 

Statements by CHAIRMAN ROBERTI re: 

Administration's Change in Travel and 

Per Diem Policies 12 

Need for Mix of Viewpoints 13 



IV 

INDEX (Continued) 

Motion to Confirm 13 

Committee Action 14 

KATHY DRONENBURG, Member 

State Board of Education 14 

Background and Experience 14 

Question by SENATOR AYALA re: 

Position on Voucher Initiative 14 

Motion to Confirm 15 

Committee Action 15 

WILLIAM P. DUPLISSEA, Member 

Occupational Safety and Health Appeals Board 15 

Background and Experience 16 

Witness in Support; 

CARL BRAKENSIEK 

California Society of Industrial Medicine 

and Surgery 17 

Motion to Confirm 17 

Committee Action 18 

Termination of Proceedings 18 

Certificate of Reporter 19 



P-R-O-C-E-E-D-I-N-G-S 
--00O00-- 

CHAIRMAN ROBERTI: We will go to Governor's 
appointees. The first is Mr. Paul M. Relis, Member of the 
California Integrated Waste Management Board. 

Senator Hart is here. Senator, are you introducing 
Mr. Relis? 

SENATOR HART: Yes, I'd like to just make a brief 
statement on Mr. Relis 's confirmation. 

CHAIRMAN ROBERTI: Please come forward, Mr. Relis. 

SENATOR HART: I wanted to urge the Members of the 
Committee to support Mr. Relis 's confirmation. He's from Santa 
Barbara and someone that I've known for more than 20 years who 
served with great distinction in our community as both a civic 
leader and someone who's been involved in environmental causes 
over this time period. 

He really combines, I think, two very important 
features that we need to have more of in the state government. 
One is, he's a visionary. He's someone who is really before his 
time on many environmental issues, particularly relating to 
recycling and disposal of hazardous waste; something that all of 
us are now aware of. He was fighting that battle 20 years ago 
in Santa Barbara and was really a pioneer in the establishment 
of source reduction and recycling programs in our community. 

But in addition, he has had a practical ability to 
work closely with people, and business, and nonprofit 
organizations, public and private sector, to get things done. 
He helped establish an organization called the Community 



Environmental Council. It's a thriving organization in our 
community that has more than 50 employees, generates revenues of 
close to $5 million per year. And what we're attempting to see 
take place under AB 939 to reach these ambitious recycling goals 
that the State of California has put forward, Mr. Relis has been 
involved for many, many years in developing successful, 
effective practices along those lines in our community. 

So, serving on this Board with that kind of vision 
and that kind of practical successful experience, he brings to 
the Board the knowledge that I think we very much need in people 
who serve in these kinds of positions. So, I want to urge the 
Members to support his nomination. 

Quite frankly, why I'm here today is that I don't 
think there would be any question about his nomination except 
for the fact that there have been recent press reports 
concerning the travel arrangements that Mr. Relis and other 
members who serve on state boards have, where they are able to 
maintain their residences and also work for the State of 
California. 

And I just want to mention to the Members of the 
Committee that what Mr. Relis is engaged in has been consistent 
with practices and procedures that have been adopted by the 
state board and the various boards that make these kinds of 
determinations, and that when he was seeking this position, made 
it very clear that this was his preference, and inquired as to 
whether or not that this would be appropriate, and was told that 
it was . 

As a result of these recent press reports, there is a 



change in policy underway in the Wilson administration. Given 
the fiscal realities that we live under, it's not surprising 
that some revision of the policy may be appropriate, and it's my 
understanding that Mr. Relis is certainly willing to abide by 
those new policies, just as he has abided by the policies under 
which he was originally appointed and, I might add, by which 
other members of state boards in the State of California have 
also pursued in terms of travel and commuting arrangements 
between their homes and Sacramento. 

With that, I'd like to introduce Mr. Relis and hope 
that the Members will support his confirmation, because he has 
been an outstanding member of our community. And in the brief 
time that he has served on the Integrated Waste Management 
Board, has served with distinction and has provided great 
leadership to that Board. 

CHAIRMAN ROBERTI: Thank you very much, Senator. 

Mr. Relis, we'll ask you what we ask all the 
Governor's appointees: why you feel you're qualified to 
maintain this position, and also maybe speak to the issue of the 
travel question that has come up. 

MR. RELIS: Thank you, Mr. Chairman and Senators. 

As you may know — and thank you, Senator Hart -- I 
have over 20 years' experience in the areas of the — that come 
under the purview of the Waste Management Board, and in 
addition, a broader set of environmental background experience. 

I'm here before you seeking my second confirmation as 
a member of the Board. I've now served two years as Chairing 
the Planning Committee, the Market Development Committee, and I 



serve on the Permits and Enforcement and Policy Committees. 

I'd like to briefly highlight what I think are my 
accomplishments to date. As Chair of the Planning Committee, I 
led the Board's effort to resolve the thorny question of what 
counts towards the 25 and 50%. We had many complaints that the 
system was too cumbersome and too costly. Through the work of 
the Planning Committee, we resolved that issue, I believe. That 
is now reflected in AB 2494 that was passed last year. This 
will reduce significantly the cost to local government of 
implementing AB 939, while maintaining the integrity of the 
waste reduction and recycling programs. 

As Chair of the Market Committee, I led the Board's 
effort to define its market development goals and objectives for 
creating markets for the 20 million tons, or thereabouts, of 
solid wastes we are seeking to divert. 

I have plans, the Board's Market Development Plan, 
which I'll enter into the record. I left it back at my chair. 

I initiated the Board's effort to define the job- 
creating potential of implementing AB 939. Our research 
suggests that up to 20,000 manufacturing jobs and additional 
25,000 collection and processing jobs can be created in our 
state through implementation of this law if we have a jobs focus 
on it. 

As proof of the job-creating potential of the Board's 
work here, we have designated 17 new recycling market zones 
throughout the state to attract additional recycling businesses 
and ventures. We have approved loans of $7 million for the 
recycling businesses and are laying the groundwork for new jobs 



in diversion. 

Fourth, I've led the Board's effort to attract new 
recycling industries to California, working with other state 
government agencies, large and small industries in paper, 
plastic, steel, rubber, oil, and other materials. I've 
personally met with dozens of these companies and seen to it 
that our staff do all they can to assist such manufacturers to 
locate in our state in accordance with our environmental 
protection standards . 

As a Board member, I have pushed for the 
reorganization of our Board to reflect the AB 939 hierarchy, 
which gives preference to waste reduction and recycling, and 
then landfill, in that order. 

CHAIRMAN ROBERTI: Could I interrupt you, Mr. Relis . 

MR. RELIS: Yes. 

CHAIRMAN ROBERTI: As is the case at the end of a 
two-year session, the Rules Committee agenda becomes enormous. 
This is not dealing specifically with you. 

We have five appointees today. Mr. Relis, 
Ms. Dronenburg, and Mr. Duplissea we will take up today. The 
Rules Committee will meet both tomorrow and Friday to take up 
the other matters . 

Mr. Foley and Mr. Lormon will be taken up Friday. My 
apologies to both of them, but the calendar is just going to be 
too large. I know in both cases you've come here from San 
Diego, but I don't know how else to accommodate you and try to 
maintain some kind of calendar. 

The other items on both our executive and our open 



session will be taken up Thursday and Friday. We'll try to make 
the Friday session, however, primarily for Mr. Foley and 
Mr. Lormon. 

Do any Members have a problem with that? 

Okay, then we'll return. Mr. Relis, thank you. 
Sorry I interrupted you. 

MR. RELIS: Am I going over? 

CHAIRMAN ROBERTI: No, you're fine. 

MR. RELIS: All right. 

What I was concluding on that point is that we have 
reorganized our Board to reflect the priority of the law. It's 
taken longer than I would have hoped, but that is now in effect, 
and I think I've had some significant contribution to that. 

Sixth, while serving on the Board, I've also 
represented California on several federal efforts that bear on 
the Board's work. In 1992, I accepted the Chair of the U.S. 
EPA-sponsored Recycling Coalition, Recycling Advisory Council. 
RAC, whose members have included U.S. Senators, has been working 
on a national effort to develop markets for secondary materials 
collected as a result of national recycling efforts. I continue 
to serve and chair that subcommittee. 

Secondly, I've been on a national basis serving on 
the Congressional U.S. Office of Technology Assessment, which 
will soon release a report to the Senate Foreign Relations and 
Finance Committee on American business and the environment. 
This report evaluates the relationship between our environmental 
regulatory structure in the U.S., and how this impacts the 
competitiveness of American business in the $300 billion 



international environmental marketplace, of which California is 
a key player. 

Last -- 

SENATOR PETRIS: Excuse me. 

Who's issuing that report? 

MR. RELIS: The U.S. Congress Office of Technology 
Assessment. 

SENATOR PETRIS: Thank you. 

MR. RELIS: Last, I would like to point out, I 
believe that I've worked closely with many members of both the 
Senate and Assembly on a wide range of waste management issues 
during my two-year stint with the Waste Board, and that 
concludes the background. 

I would like to make a short statement on my travel, 
per diem, and office issues. 

First, I would like to note that I served a very 
short appointment. When I was appointed to the Board, there was 
only 16 months remaining on my appointment term of a two-year 
term before this kicked into a three-year term. 

I was very concerned about the terms of my employment 
during that initial short period. In that regard, I sought 
legal advice from the Board's attorney on state policy regarding 
travel, per diem, and inquired as to the terms and conditions of 
other Board members and commissioners to commuting to and from 
Sacramento. Based on that information, which was set forth to 
me in administrative manner, I declared my designated 
headquarters as Santa Barbara, an action consistent with the 
other commuting member of our Board, and with other boards and 



8 

commissions, as I understood it. 

The fact that I was commuting and receiving travel 
and per diem was never hidden from anyone. I understood it to 
be an established, accepted practice for the appointees on 
boards and commissions. 

Since several Board members and commissioners had 
gone through confirmation, including myself a year ago, and no 
concerns were raised, the issue had not come up, I did not 
realize this was the issue that I now understand it to be. 

As for my office, I was informed that since I would 
be spending the bulk of my time based in Santa Barbara, I was 
allowed office space. I initially worked at that time out of my 
home. In an attempt to avoid incurring costs, which I — well, 
I asked General Services to determine if any surplus state 
office space was available in the Santa Barbara to Ventura area. 
Only after they determined that there was none -- we tried the 
University, other locations — the Department of General 
Services then went through a formal procurement to obtain space. 

In response to the concerns that had been raised over 
this point, I have directed our Executive Director to initiate 
closing the office as soon as they can do it, and will be 
establishing my headquarters in Sacramento to address the travel 
and per diem concerns consistent with what I now understand to 
be a new policy that has come forth from the Governor's Office. 

CHAIRMAN ROBERTI: Thank you. 

Now, as I understood it when Senator Hart spoke, the 
travel policy in the Governor's Office, and the one to which you 
apprised the Governor when you were appointed, was that your 



headquarters would be in Santa Barbara, and that they were fully 
apprised of that when the appointment was made. 

MR. RELIS: As far as I understood. 

CHAIRMAN ROBERTI: There would be travel and per diem 
while you were in Sacramento. 

MR. RELIS: Yes, but the bulk of this was handled 
administratively within the Board, because I did not -- I made 
it clear that I was going to be commuting. 

CHAIRMAN ROBERTI: Now, in '91-92, you spent 114 days 
in travel to Sacramento. However, in '92-93, as I have it here, 
it was 211 days in Sacramento. 

MR. RELIS: No, I don't think that figure,, the 
latter one, is — 

CHAIRMAN ROBERTI: Maybe I'm wrong. No, I'm sorry; 
I'm adding them up. 

MR. RELIS: It's 97, I believe. 

CHAIRMAN ROBERTI: Fine. That's not more than half, 
where it would be a little bit hard to explain your headquarters 
somewhere else. Okay, fine; no problem. 

Senator Ayala. 

SENATOR AYALA: There is a move afoot to change the 
policy that you're working under today? 

MR. RELIS: I have -- Senator Ayala, I'm aware that 
there is a statement that has been issued from the Governor's 
Office. I don't have that statement. 

MS. MICHEL: From the Department of Personnel 
Administration. It's a new policy. 

SENATOR AYALA: These changes, the Governor or the 



10 

executive branch makes these changes in the policy, or is that 
the Legislature? 

MS. MICHEL: It's through the Department of Personnel 
Administration . 

SENATOR AYALA: They will make the changes so that 
the problem that you encountered won't happen. 

MR. RELIS: As I understand it, I will be responsible 
for — 

CHAIRMAN ROBERTI: There actually is a problem here, 
not so much with Mr. Relis, but in general. I mean, we have to 
economize; it's absolutely imperative. 

But there's a problem, and that is that pretty much 
everybody who works at a high level in state government will 
have to live in Sacramento. That's very nice, but you should 
have a little bit of a mix, just as Legislators should be a 
little bit of a mix. And that does not all come from 
Sacramento. We really have to live in our districts. 

There is a problem, especially that I've noticed over 
the years, for Southern California. I mean, it is almost a 
bureaucracy-it is that, you know, what is appropriate in 
Sacramento is appropriate everywhere. And I've often carried 
legislation where, I mean, I pull my hair out at the notion of 
people in government have about Southern California, of Los 
Angeles, and what our needs are. Sometimes you get the feeling 
that good government is equated with not doing something that 
Southern California wants. They're almost synonymous. 

I'm not saying that's the case with you, Mr. Relis, 
one way or the other. But I'm just saying that the fact that 



11 

somebody has to travel from his headquarters city to Sacramento, 
I mean, yes, I think the cost is very important. It doesn't 
shock me all that much because I do think there is a need for a 
mix. 

I was a little bit concerned when I thought it was 
211 days, but that's not the case. It was 9 7 days. 

Senator Hayden is here to speak on the Relis 
appointment . 

SENATOR HAYDEN: Mr. Chairman, Members, I'll be 
brief . 

But I feel that I had an obligation to appear because 
in June, I wrote a letter to the Rules Committee and to Senator 
Roberti in particular, asking that Mr. Relis 's confirmation be 
put over until some issues were dealt with. 

I believe that with a little more clarification, 
we'll find that there have been some significant reforms, I 
think, that have occurred here. 

I don't come before you to comment critically on Mr. 
Relis 's person or qualifications, but to say that I think at 
$93,000 job, which has expenses for an office that totaled 
$25,000, and per diem $23,000, and air fare $23,000, over about 
a two-year period is one that should flag our attention. And I 
understand that the Governor, at least through Mr. Schnur, has 
said that regulatory changes in this area, Senator Ayala, are 
ordered on a fast track. So, apparently, there is going to be a 
rapid change in this policy, which I think is all to the good. 

There was one other issue that I wanted to raise that 
I think has been raised outside the committee process, and that 



I 

2 

3 

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5 

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8 

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II 

12 

13 

14 

15 

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17 

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19 

20 

21 

22 

23 

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25 

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27 

28 



12 

is Mr. Relis's attendance at a fundraiser by the Wilson 
administration for the waste collection industry that had a 
majority of the appointed members of the Waste Management Board, 
including Mr. Relis, present. That's the Board that oversees 
the siting of new waste dumps in the Southern California desert. 
That was on May 11th. 

I understand also that the Administration has 
indicated that that was a, quote, "mistake", and that such 
policies or practices won't occur again. 

If that's correct, and if the Rules Committee has 
secured those understandings with the Administration, I think 
this represents a great set of reforms. 

With respect to Mr. Relis's environmental 
qualifications, particularly in the area of recycling, I think 
that they're very good. I hope that he will take a very 
critical look at these very big dumps being put in the Southern 
California desert, but on the recycling issues he's been very 
good. 

But as I say, the travel issue, the per diem issue, 
the fundraising issues, I think, were worth raising. And 
hopefully, because of this process, the Administration is 
changing its policies. 

Thank you very much for your time. 

CHAIRMAN ROBERTI: Yes, I understand the 
Administration is changing its policies on both the per diem and 
on the attendance at campaign events . And I think with the 
economies we have to effect, we have to look at these travel 
expenses. But I do stick to my point that there are two sides 



13 

of that coin. At some point, we will have everybody living in 
Sacramento; everybody seeing the world through Sacramento eyes. 

And on a whole host of issues -- I've carried fire 
safety issues for a number of years -- and the treatment you get 
from the Sacramento bureaucracy is almost that Southern 
California, at times, would be better off burning. I'm quite 
serious. I mean, it's just shocking, the attitude. 

The only way that that is assuaged at all is if you 
have a mix of people who are in positions of influence, and some 
people can't do that if they can't travel. 

I'm not making a comment justifying one way or 
another, Mr. Relis, on the size of your travel, but that's how 
I've felt for a number of years. 

Is there any opposition to Mr. Relis' s appointment in 
the audience? 

Do I hear a motion? 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN ROBERTI: Senator Beverly moves 
confirmation. 

The Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
Senator Roberti. 



14 

CHAIRMAN ROBERTI: Aye. 

The vote is four to nothing; confirmation is 
recommended to the Floor. 

MR. RELIS: Thank you very much. 

CHAIRMAN ROBERTI: Mrs. Kathy Dronenburg, Member of 
the State Board of Education. 

We will ask you once again — you've been before us 
-- why you feel you're qualified to maintain this position. 

MS. DRONENBURG: Thank you, Senator Roberti and other 
Senators . 

I feel like I'm qualified to maintain this position 
because over the years, I believe that I have demonstrated a 
deep caring for children, which I have had for a number of years 
before being appointed to the Special Education Commission, and 
then subsequently to the State Board of Education. 

I also believe that a significant portion of our 
population is children who have disabilities, and currently 
there is no one else on the Board of Education who has that 
background or expertise. 

CHAIRMAN ROBERTI: Good point. Thank you very much. 

Is there anyone here in opposition to the Dronenburg 
appointment? I see no opposition. 

Any questions from the Members? Senator Ayala. 

SENATOR AYALA: What is your official position on the 
voucher system that is going to face us in November? Can you 
make an official statement/position on that? 

MS. DRONENBURG: I am happy to have the opportunity 
to say I'm 100% opposed to that particular voucher initiative. 



15 

CHAIRMAN ROBERTI: If it passes, what are we going to 
do? 

MS. DRONENBURG: Pray. 

CHAIRMAN ROBERTI: Yes , pray; that's right. 

Any other observations? Do I hear a motion? 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN ROBERTI : Senator Beverly moves we recommend 
confirmation. Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala . 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
Senator Roberti. 

CHAIRMAN ROBERTI: Aye. 

The vote is four to nothing; confirmation is 
recommended to the Floor. 

Congratulations . 

MS. DRONENBURG: Thank you very much. 

CHAIRMAN ROBERTI: William P. Duplissea, Member of 
the Occupational Safety and Health Appeals Board. 

We all know you, but we will ask you the same 
question anyway: why you feel you're qualified to assume this 
position? 

MR. DUPLISSEA: Well, Mr. Chairman and Members, I 
appreciate the opportunity to answer that question, and any 



16 

others that you might have since I am well prepared. 

I feel I'm qualified for this position for it is a 
procedural, not a policy, body. And quite frankly, it 
frustrates me at times when the Board has to make decisions 
based purely on the actions of a prior proceeding versus what 
must feel right in one's gut, as it were, especially if that 
were to let off a bad operator /employer, or on the other hand, 
uphold the penalty of someone who has done all that he or she 
can do and has just fallen through the crack in a regulation. 

But with my background, specifically that of working 
as a manual laborer, and also as a businessman, and then also my 
experience as a Legislator, and as the Administrative Director 
of the Workmen's Compensation System, it's all of those 
backgrounds I have found in the time that I have been there, 
since January 19th of this year, to be very valuable in seeing 
these issues clearly. Though again, having to rely on the 
procedural aspects rather than the policy aspects, although 
frustrating, it has given me a certain amount of enlightenment 
as to how these issues can happen. 

Specifically, one other thing that I'm anxious to 
add, and that is I think there are a great many things with the 
OSHA legislation and regulation that can be changed. As you 
know, it's a cumbersome process, working through the Department 
of Industrial Relations, and through the Governor's Office, and 
on to the Legislature. And I would hope that with my background 
in the Legislature, that perhaps some of these issues, some of 
the tightening can happen in a more expedient manner with me on 
that Board because of my background and my relations with many 



17 

of you. 

And for that reason, I'd ask for your recommendation. 

CHAIRMAN ROBERTI: Thank you very much. 

Any comments, questions? Anyone in the audience in 
opposition? Anyone here in support? 

Please come forward, Mr. Brakensiek. 

MR. BRAKENSIEK: Mr. Chairman, Carl Brakensiek, 
representing the California Society of Industrial Medicine and 
Surgery. 

We support Mr. Duplissea for this confirmation and 
his appointment to the OSHA Appeals Board. 

CHAIRMAN ROBERTI: Thank you very much. 

I'd also like to make note of the fact that Senator 
Alquist was here earlier, wanting to introduce the Assemblyman, 
and could not make it, but he indicated to all of us his support 
for your candidacy. 

Do I hear a motion? 

SENATOR BEVERLY: Move confirmation. 

CHAIRMAN ROBERTI: Senator Beverly moves 
confirmation. Secretary, call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 
Senator Roberti. 



18 

CHAIRMAN ROBERTI: Aye. 

The vote is four to nothing; confirmation is 
recommended to the Floor. 

Congratulations . 

MR. DUPLISSEA: Thank you very much, Mr. Chairman and 



Members . 



[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
5:37 P.M. ] 

--00O00-- 



19 
CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

, IN WITNESS WHEREOF, I have hereunto set my hand 

this O^fe day of August, 1993. 




IVELYrf J^MIZARJ 
Shorthand Reporter 



238-R 

Additional copies of this publication may be purchased for $4.50 per copy 
plus 7.75% California sales tax. 

Senate Publications 

11 00 J Street, Room B- 15 

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Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 238-R when ordering. 



L5oo 
R<* 



HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

FRIDAY, AUGUST 27, 1993 
2:27 P.M. 






i 



DOCUMENTS DEPT. 

SEP 1 3 1993 

SAN 1-aANCJSCO 
PUBLIC LIBRARY 



239-R 



Reported by: 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 113 
SACRAMENTO, CALIFORNIA 



FRIDAY, AUGUST 27, 1993 
2:27 P.M. 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 
MEMBERS PRESENT 
SENATOR DAVID ROBERTI, Chair 
SENATOR WILLIAM CRAVEN, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR ROBERT BEVERLY 
SENATOR NICHOLAS PETRIS 

STAFF PRESENT 
CLIFF BERG, Executive Officer 
PAT WEBB, Committee Secretary 
RICK ROLLENS, Consultant on Bill Referrals 
NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

JOHN FOLEY, Member 

California Regional Water Quality Control Board 

San Diego Region 

LAURA HUNTER, Director 
Clean Bay Campaign 
Environmental Health Coalition 

MICHAEL PAPARIAN 
Sierra Club 

JOHN J. LORMON, Member 

California Regional Water Quality Control Board 

San Diego Region 



Ill 

INDEX 

Page 

Proceedings 1 

Governor ' s Appointees t 

JOHN FOLEY, Member 

California Regional Water Quality Control Board 

San Diego Region 1 

Background and Experience 1 

Witnesses in Opposition: 

LAURA HUNTER, Director 

Clean Bay Campaign 

Environmental Health Coalition 2 

Closed Beaches in San Diego County 2 

Continuing Unaddressed Violations 3 

Issuance of Illegal Permit 3 

Board's Removal from Hazardous Waste 

Strike Force 3 

Auditor General's 1987 Recommendation for 

Stronger Enforcement Ignored 4 

Board Generally Votes Unanimously 4 

Possible Conflict of Interest Due to 

Nominee ' s Employment 5 

MIKE PAPARIAN 

Sierra Club 5 

Board Has Worst Record in State on 

Environmental Enforcement 6 

Exclusion by FBI from Strike Force 6 

Questions by SENATOR PETRIS re: 

Role of FBI 7 

Number of Strike Forces in State 7 



IV 



INDEX (Continued) 

Questions by SENATOR AYALA re: 

Worst Record of Allowing Water Control 
Violations 8 

Nominee's Responsibility 9 

Possible Conflict of Interest in 

Nominee ' s Employment with Regulated 

Water District 9 

Focus on Voting Record while on 

Regional Board 10 

Response by MS. HUNTER 11 

Ways Board Is in Violation of 

Charge to Protect Water Quality ... 11 

Eastern Water Distict 11 

Point Loma Discharge 12 

Rebuttal by MR. FOLEY 13 

Problems on Beach Due to Sewage Flows 

from Mexico 14 

Unified Port District's Environmental Budget . . 14 

No Conflict of Interest Problem Exists 14 

Eastern Municipal Water District Decision 

Attempted to Reconcile Federal and State Law . . 14 

Question by SENATOR BEVERLY re: 

FBI Letter 15 

Questions by SENATOR AYALA re: 

Board is Worst Violator of EPA Directives ... 17 
Board Must Enforce EPA Mandates 18 

Responses by MS. HUNTER re: 

Auditor General's Finding that Board Must 

Have Aggressive Enforcement Action . 18 



INDEX ( Continued) 

Questions by CHAIRMAN ROBERTI re: 

Board's Ability to Go beyond Voluntary 
Compliance 19 

Comparison to Other Regional Boards .... 19 

Lack of Environmental Protection 19 

Port District's Environmental Program Led 

by Attorney 2 

Chronic Toxicity Standard in Eastern's Permit . 21 

One Thousand Staff Hours Involved 21 

Questions by SENATOR PETRIS re: 

Any Improvements in Inspections and 

Reports since Auditor General's Report . . 22 

Penalty for Not Filing Report 23 

Revocation of Permits for Nonfiling .... 23 

SENATOR HART ' s Survey Found Lax 
Enforcement and Low Ratio of Fines to 
Violations 23 

Responses by MR. FOLEY re: 23 

Record Won't Reflect Fines but Does 

Reflect Clean-ups 24 

Number of Corrective Actions Taken .... 24 

Questions by SENATOR PETRIS re: 

Problems with Companies Not Filing Reports 

in Timely Manner 25 

High Public Support in San Diego for Bay 

Protection 26 

Need to Treat Municipality Violations Same 

as Private Company Violations 27 

Response by MS. HUNTER 28 

Fines Held in Abeyance 28 



INDEX (Continued^ 

Need to Encourage Compliance 2 9 

Questions by SENATOR AYALA re: 

Response to Auditor General's Findings 2 9 

Automation of System to Track Reports 31 

Response by MS. HUNTER re: 

Permitting Given Higher Priority than 
Enforcement 31 

Responses by MR. PAPARIAN re: 

Letter to Board from Cal-EPA re: Strike Force . 32 

Statements by CHAIRMAN ROBERTI re: 

Lax Enforcement 33 

Intention to Cast Negative Vote on Confirmation 33 

Motion to Confirm 33 

Committee Action 34 

JOHN J. LORMON, Member 

California Regional Water Quality Control Board 

San Diego Region 34 

Background and Experience 34 

Questions by CHAIRMAN ROBERTI re: 

Possible Conflict of Interest 35 

Clients Subject to Regulation by Board 35 

No Accusations of Violation of Conflict 

of Interest Statute 36 

Questions by SENATOR PETRIS re: 

Guidance Used for Recusal 37 

Quandary of Possibility of Conflict Versus 
Participation at Meetings 37 

Frequency of Recusal 38 



Vll 



INDEX ( Continued ^ 

Comments on Auditor General ' s Report and 

Overall Record of Regional Board 39 

Questions by SENATOR AYALA re: 

Clients Subject to Board's Regulations 40 

Intention to Retain those Clients 4 

Response by SENATOR CRAVEN . . 40 

Statements by CHAIRMAN ROBERTI re: 

Sympathize with Conflict of Interest Problem . . 41 

Witnesses in Opposition: 

Clients Have Caused Much of San Diego's 

Water Pollution Problems 42 

Clarification of Number of Agenda Items .... 42 

Nominee Is San Diego's Leading Environmental 

Defense Attorney 43 

Necessity to Recuse on Major Clean-up 

Orders 43 

Questions by SENATOR CRAVEN re: 

Public Hearings and Public Input 44 

Nominee ' s Law Firm Represents Chronic 

Environmental Violators 44 

Bad Policy Ethically for Nominee 

to Sit on Regional Board 45 

Nominee's Position on Strike Force Cases .... 45 

MIKE PAPARIAN 

Sierra Club 46 

Representation of Clients Who Are 

Dischargers of Substances into Water Supplies . 46 

Number of Nominee ' s Billable Hours Attributable 

to Clients Regulated by State or Regional Board 47 



Vlll 

INDEX (Continued^ 
Statements by SENATOR CRAVEN re: 

Loss of Income by Sitting on Board 47 

Statements by CHAIRMAN ROBERTI re: 

Objections Do not Go to Voting Record 4 8 

Philosophical Perspective 48 

Response by SENATOR CRAVEN 4 8 

Motion to Confirm 49 

Committee Action 50 

Termination of Proceedings 50 

Certificate of Reporter 51 



P-R-O-C-E-E-D-I-N-G-S 
— ooOoo — 

SENATOR CRAVEN: We'll begin today with the 
Governor's appointees who are appearing today for confirmation. 
First we have John Foley, member of the California Regional 
Water Quality Control Board for the San Diego Region. 

Mr. Foley, if you will come up here and tell us why 
you feel that you are qualified for this important position, we 
would appreciate it. 

MR. FOLEY: Thank you, Mr. Chairman and Members of 
the Committee . 

I'm John Foley. This is my third nomination to the 
Regional Water Quality Control Board in San Diego. I've only 
had the opportunity to appear here once, this time. 

During those seven years, I think I've gained an 
appreciation for the rather difficult task of carrying out our 
water quality regulations. We have in that seven-year period 
issued some 234 orders that involved 29 civil liabilities, 116 
clean up and abatement orders, some 48 cease and desist orders, 
and some 24 time schedules. So, we have had a busy agenda. 

My background is, I manage a water district in Orange 
County, serving approximately 135,000 people. I fill the 
position of water supply on that regional board. 

I have a civil engineering degree and a masters in 
civil engineering from the Massachusetts Institute of 
Technology. 

I'll be glad to give you more detail if you care, 
sir. 



SENATOR CRAVEN: Very well, thank you very much. 

Before we go to the Committee, let me ask, is there 
anyone in the audience who wishes to speak on behalf of this 
candidacy? Anyone who wishes to speak in opposition? Fine, 
come up. State your name. 

MS. HUNTER: Good afternoon. My name is Laura 
Hunter. I work for the Environmental Health Coalition in San 
Diego, where I'm Director of the Clean Bay Campaign. We watch 
and work on toxic pollution issues in San Diego Bay. And as 
part of my position, I attend virtually all, but mainly I 
watch-dog the Regional Board of San Diego. 

I really appreciate the opportunity to come and talk 
to you today and the special effort that you've made for me to 
be here. 

Everytime an agenda comes out, the statement of the 
job of the Regional Board comes with the agenda. The first 
statement is: 

"The primary duty of the Regional 

Board is to protect the quality of the 

waters within the region for all 

beneficial uses." 

We are here today because — to oppose Mr. Foley's 
reappointment to the Regional Board because it has been our 
experience, and we have detailed our concerns in letters to all 
of you, that the Regional Board has not done this. They have 
not been protecting responsibly the water quality in our region. 

San Diego has very many serious water quality 
problems. Our beaches are closed. In 1991, we had over half of 



the beach closures for the entire state. Our bays are posted. 
Our kelp bed is currently posted right now. There are illegal 
discharges of sewage sludge going on from the Point Loma 
treatment plant as we speak. 

And you would think that this kind of situation, this 
water quality degradation, would be addressed with very 
aggressive action by the Regional Board. Unfortunately, the 
opposite has been true. Violations continue to go on 
unaddressed. You'll remember the famous break in the pipe where 
the affluent met the effluent, and during the America's Cup, was 
dismissed. We had beaches closed for four months with that 
break, and it was virtually dismissed with a shrug and a kind of 
an, "Oh, well," by the Regional Board. 

They have allowed a clean-up order that just required 
monitoring and left PCE in a drinking water designated 
groundwater basin 80 times above Title 22 standards. They 
issued a permit that was illegal and forced the EPA, federal 
EPA, to come to town and take over that permit. And I don't 
think that's what you had in mind when you created your state 
MPDS program. 

Hiding behind business-friendly rhetoric, they 
continue to turn their backs on the law. Yes, they have 
discretion. I understand that. But they also have an obligation 
to the law as it is written, and that is to protect water 
quality. 

Speaking of compliance, and we want compliance, that 
is what regulation is for, they have been removed by the FBI 
from the Hazardous Waste Strike Force. This is a strike force 



4 

-- and I could pass a letter that evidences that -- this is a 
strike force that has been formed of all regulatory agencies to 
pursue the chronic and the criminal environmental polluters. 
These are the worst of the worst folk that are impairing our 
environment. Now our Regional Board is not represented on that 
very critically important task force. 

If you turn the letter over, you will see the letter 
from Cal-EPA, who was very concerned that this had happened, and 
we all want to see the Regional Board back on that task force. 

In 1987, the Auditor General came and looked at the 
records of our Regional Board and made the very strong 
recommendation that they have to be — they have to do stronger 
enforcement if we are to get — well, that was their 
recommendation . 

Nothing has changed. In 1991, EHC did an evaluation 
of the 19 MPDS permit holders around San Diego Bay. Out of 222 
of the violations that we found, two fines had been levied. One 
percent enforcement is not adequate, and I don't think it's what 
you had in mind when you created this program. 

I want to be very clear that I don't lay the blame 
for these decisions that I've just been complaining about at the 
feet of Mr. Foley alone. He has been very active in a 
leadership role on the Board, but the Board generally votes 
unanimously. He just had the misfortunate of being the first 
reappointment up, and we are very committed that we do not 
support the reappointment of these Board members, given these 
kinds of decisions. But it is not only his fault, but maybe a 
ninth of it we would hold him responsible for. We are opposing 



the reappointment on these kinds of decisions. 

We also believe that as a general manager of a water 
district, that that is a conflict of interest. And maybe 
technically, by the letter of the law, it is not, it certainly 
is not good policy. 

I need not remind you that although the regional 
board members are the nominees of the Governor, they are your 
representatives, and they are there to carry out the laws that 
you pass. This is not happening, and I think it seriously 
undermines the Legislature's efforts to improve the quality of 
the environment and to reduce the necessity of additional 
environmental regulations. 

It is time for a change, and we are asking for your 
help. 

In closing, I would just like to add, I said it in my 
letter to you, but I'm going to say it again. I would you ask 
not to condemn us to four more years of these kinds of water 
quality decisions and conflicted appointments. We don't deserve 
this, and our tourist industry, with the closed beaches and the 
empty hotels, and our environment are not going to survive it. 
We deserve appointments that will indeed protect the quality of 
the waters within the region for all beneficial uses, which is 
the first statement of their responsibilities. 

Thank you again for your time and attention. 

SENATOR CRAVEN: You're entirely welcome. 

MR. PAPARIAN: Mr. Chairman and Members, I'm Mike 
Paparian. I represent the Sierra Club. 

We join Laura Hunter and the Environmental Health 



Coalition in opposition to Mr. Foley's appointment. 

If we were to pick out one agency of the state with 
the worst record on environmental enforcement, it would have to 
be the San Diego Regional Water Quality Control Board. Mr. 
Foley has been an active and consistent member of that Board for 
several years. That Board as a whole has done very little to 
correct problems that have been brought to their attention for 
years . 

In fact, I believe it was in 1987, they got a wake-up 
call from the Auditor General of the state, who took a look at 
the Regional Board, took a look at their enforcement actions, 
and said, "Hey, you've got some real problems here." 

They did very little as a result of that. In fact, 
in 1992, as Ms. Hunter pointed out, the FBI took the rather 
extreme action of excluding the Regional Water Quality Control 
Board from discussions of enforcement actions on environmental 
matters in the San Diego area. 

We've seen, as I've said, very little from the 
Regional Board itself and the Board members to correct this 
action. As Ms. Hunter mentioned, Mr. Foley isn't alone. The 
nine members of the Board have been acting together in this 
manner, and it's a manner which we believe does not represent 
well the interests of the state, or the interests of the 
environment, or the interests of the people of San Diego. 

So, we would urge the rejection of Mr. Foley for this 
position. 

SENATOR PETRIS: I have a question. 

SENATOR CRAVEN: Yes, Senator Petris . 



SENATOR PETRIS: What is the role of the FBI? Do 
they enforce the federal part of the Clean Water -- 

MR. PAPARIAN: That's right. In a number of areas in 
the state, there are joint strike forces between federal, state, 
and local environmental enforcement agencies. 

In the case of the FBI, they have a number of 
responsibilities. If there are environmental crimes that 
involve across border — across international border, across 
state border -- problems, they get involved. They've taken a 
very active role in environmental enforcement in San Diego. 

SENATOR PETRIS: How may of those strike forces are 
there up and down the state? 

MR. PAPARIAN: Quite a few. I'd say at least — at 
least six or eight that I'm aware of, and probably more. 

SENATOR PETRIS: They're doing this on behalf of the 
U.S. Attorney, I gather, Department of Justice. 

MR. PAPARIAN: Right. 

SENATOR PETRIS: They don't go out on their own and 
do this. They're an investigating arm, I suppose. 

MR. PAPARIAN: Right. 

SENATOR PETRIS: It's just a little scary to have the 
FBI remove a state official. When I saw that, I was kind of 
alarmed. They're doing it to carry out the federal policy, 
which is combined with the state, local, et cetera, I can see 
that. It's within their jurisdiction in enforcing the federal 
part of the environmental laws. 

Thank you. 

MR. PAPARIAN: Thank you. 



8 

SENATOR CRAVEN: Senator Ayala. 

SENATOR AYALA: The gentleman says that this is the 
Regional Board that has the worst record of allowing violations 
of water control by state and federal agencies. 

Is that what you said earlier? 

MR. PAPARIAN: If I were to pick out the one entity 
of the state, the one entity with responsibility in the 
environmental area that has the worst record, I'd have to pick 
the San Diego Regional Board. 

SENATOR AYALA: You say "the worst." Are they in 
violation of federal EPA rules, or the State Water Control 
Board? What do you mean by worst? What are they violating? 

MR. PAPARIAN: Well, they aren't dischargers in and 
of themselves, obviously. They're a regulatory agency. 

Our concern is their enforcement of state and federal 
laws. And in the case of the Regional Board, we think that they 
have had a very spotty enforcement record, that they haven't 
shown or demonstrated a commitment to enforcement, that there 
have been instances where other agencies or, in some cases, 
citizens through court proceedings, have had to really step in 
and seek enforcement of the law because this agency has not 
adequately enforced the law. 

SENATOR AYALA: This agency is the worst in enforcing 
existing law -- 

MR. PAPARIAN: Right. 

SENATOR AYALA: -- as it pertains to water quality. 

MR. PAPARIAN: Right. 

SENATOR AYALA: Is there anything that you can put at 



the foot of Mr. Foley that he is responsible for some of these 
violations as one member? 

MR. PAPARIAN: Well, obviously, you know, any of the 
companies involved would be the ones responsible for any 
violations . 

The agency which Mr. Foley sits on would responsible 
for reaction to those violations of law. 

SENATOR AYALA: Is he not performing to make sure 
that these people comply with the law? 

MR. PAPARIAN: We believe that Mr. Foley and the 
other members of the Board have not taken strong enough or, in 
some cases, any action against many of the violators of water 
quality laws in the San Diego region. 

SENATOR AYALA: What about Mr. Foley being General 
Manager/Secretary of the Moulton Niguel Water District? Is 
there a conflict of interest in your opinion of Mr. Foley 
serving as a member of that Regional Board, yet he manages a 
water district within that district. Is there a conflict of 
interest? 

MR. PAPARIAN: I am — I am concerned about that, but 
in terms of — 

SENATOR AYALA: You're not concerned? 

MR. PAPARIAN: I am concerned about that. 

In terms of raising it as an issue, we have another 
appointee who, I believe, there's additional questions involving 
who he represents. It's a different situation than Mr. Foley's 
situation. 

I haven't looked very closely at the types of actions 



10 

that the Regional Board might take involving Mr. Foley's 
employer, and I haven't -- so I just -- I can't give you a full 
answer in terms of potential conflicts of interest. 

SENATOR AYALA: Are there any problems with his 
employer and the district? 

MR. PAPARIAN: I haven't looked specifically at this 
employer and the district, so I can't answer that. 

SENATOR AYALA: Are there other members of any 
regional board in California who also serve in a water district 
as managers or secretary, whatever the case may be? 

MR. PAPARIAN: I believe there are. 

SENATOR AYALA: There are? 

MR. PAPARIAN: I believe there are. I can't tell you 
who . 

SENATOR AYALA: So why are you focusing on the 
gentleman here? 

MR. PAPARIAN: The reason I'm focusing on Mr. Foley 
is not so much because of his employment as his record as a 
member of the Regional Board. 

SENATOR AYALA: His voting record? 

MR. PAPARIAN: Yes, his voting record. 

SENATOR AYALA: I see, but you see no conflict of 
interest between his employer and him serving on the Board at 
all at this point? 

MR. PAPARIAN: I wouldn't characterize it quite that 
way. I am concerned about his working for an entity that is 
regulated by the Board, but I haven't investigated what sorts of 
issues might arise where that's a real conflict. 



11 

SENATOR AYALA: But except for his voting record, you 
have nothing that you can tell us about personally in his 
involvement with his water district versus the Board? 

MR. PAPARIAN: No, I haven't looked at that. I'm not 
sure if Ms. Hunter has or not. 

MS. HUNTER: Can I add a couple things? 

SENATOR AYALA: Yes. 

MS. HUNTER: To the point of conflict of interest — 
and you correct me if I'm wrong on this — but the Moulton 
Niguel Water District does not have a permit. They are 
regulated through the Aliso Water Management Agency which does 
have a permit. And Mr. Foley sits on the Regional Board that 
regulates that agency. So, it's kind of a one step removed. 

I think probably if we were to drag the law of 
Porter-Cologne out here, that's not a technical conflict of 
interest; however, I think you can see where a concern raises on 
our part, since the decisions that the Regional Board makes do 
affect his agency. 

With respect to your other question about, you know, 
how is the Regional Board in violation. I mean, we believe that 
they actually are in violation in terms of their charge to 
uphold the law and protect water quality. And I can give you a 
couple of examples. 

One was the Eastern Municipal Water District permit, 
which I mentioned. What happened with that was that the 
discharger, although he admitted — Eastern admitted they could 
probably make what's called a one chronic toxicity measurement, 
which, of course, is the measurement of how many things die from 



12 

this stream of water. And that is a requirement of 
Porter-Cologne and EPA, that a numerical number for chronic 
toxicity be in a discharge permit. The discharger said they 
didn't want it in there, and the Regional Board issued a permit 
without it in there. Therefore, EPA said, "Well, sorry, you 
can't do that, and we're going to take over your authority for 
that permit." That was one example. 

Another -- I'll just give you one more quick example 
where the State Water Board resolution says you're not to leave 
this list of chemicals in groundwater above Title 22 limits, 
which — if a groundwater basin is being used for drinking. 
They issued -- one of those clean-up and abatement orders that 
they did issue didn't require any clean up and it allowed this 
PCE to stay in the groundwater basin and they just had to 
monitor it. But that's not clean-up, and although it was a 
clean-up and abatement order. We have appealed that to the 
State Board and that will be heard soon, I think. 

SENATOR AYALA: You're saying that his Regional Board 
is not implementing Porter-Cologne? 

MS. HUNTER: Yes, I am saying that. 

I can give you other instances. We're having, 
finally, a hearing next month on the City of San Diego that, you 
know — since you asked; you'll regret this, probably — but 
here ' s a letter from the State Board saying that Point Loma has 
violated their discharge requirements in 28 of the last 60 
months. Now that is higher. There have been — in one month it 
was up to 651 dry weight tons of sewage sludge discharged over 
the permit limit. This has been going on. The Regional Board 



13 

has known about this for over a year, and nothing has been done. 
Finally we have a hearing set for next month, and we're 
certainly hopeful that something's going to happen. But this 
kind of discharge has been ongoing, and nothing has been done to 
stop it. 

So, those are some specific examples. 

SENATOR AYALA: Thank you. 

CHAIRMAN ROBERTI: Anyone else wishing to testify in 
opposition? 

SENATOR CRAVEN: Mr. Chairman, we had two individuals 
testify following the opening remarks of the nominee, and that's 
about where we stand. 

CHAIRMAN ROBERTI: Have we had anyone in support? 

SENATOR CRAVEN: No. 

CHAIRMAN ROBERTI: Is there anyone here who wishes 
to testify in support? 

Are there any other observations from the Committee? 

SENATOR AYALA: I wonder if Mr. Foley would like to 
respond to the accusations . 

CHAIRMAN ROBERTI: Mr. Foley, please. 

MR. FOLEY: I would like to respond, if it's 
appropriate, Mr. Chairman. 

We do respect very much the opinions of the 
Environmental Health Coalition, and we invite them to our 
meetings. And Laura is a very healthy member of that audience 
that reviews our work. 

We don't necessarily concur in all our decisions, but 
I could address very carefully in each of these points. 



14 

Let me just say that the problems that she mentions 
on the beach are primarily attributable to the sewage flows 
coming from Mexico, which is a real problem, an international 
problem. We have finally, through our efforts, reached 
agreement with the International Boundary Water Commission, and 
the City of San Diego, and the State of California to build a 
joint treatment plant and outfall to handle that very problem. 
This is a major accomplishment that the Board's been able to 
bring about in the last five years. 

As far as the Bay is concerned, six years ago the 
Unified Port District had a budget of $18,000 and one individual 
that looked at environmental compliance. This year, they have 
47 individuals, a budget of over $10 million. There's been a 
significant effort on the part of the Unified Port District 
because of the work we've done with them. Voluntary compliance. 
No hatchet; just voluntary compliance. 

She's mentioned a conflict. I do not have any 
conflict, and I have a legal opinion from the attorney of the 
State Board that says that my service as a general manager of a 
water district is not a violation of the regulations. 

We do appreciate, and she has brought up points that 
we struggle with. Again, we don't necessarily agree. 

As a Board, we generally have unanimously concluded. 
The issue of the permit with Eastern Municipal is a classic of 
trying to reconcile the federal and the state law. We do not 
agree at the state level . The State Water Board does not agree 
with the toxicity issue that the federal EPA has come out with. 
The Eastern Municipal permit was to put live-stream discharge of 



15 

secondary treated waste into the Santa Margarita River, which 
eventually furnishes the water supply, drinking water supply, 
for Camp Pendleton. That's a closed system. They put their 
waste water into the ground, and the ground does the clean-up 
that's necessary, and they draw their drinking water out. 

This live-stream discharge was a benefit to the 
Marine Corps, a benefit to the downstream users, but we differed 
on the toxicity issue. We didn't differ with the state; we 
differed with federal EPA, and there were two nutrient levels 
that an individual in the federal EPA questioned. We had 
testimony, a $2 million study by the consultant for Eastern, 
that convinced the Board that that was not a major issue. And 
we issued the permit, and EPA took it and said, "We'll take 
jurisdiction," which is certainly their prerogative. 

They have now made overtures to the Board to bring it 
back to us, to go back and work on it again. So, this is not -- 
this is to encourage reclamation, which is one of the objectives 
we're trying to do in the San Diego Region. 

That was too lengthy, but I did want to address those 
points . 

SENATOR BEVERLY: May I ask a question? 

CHAIRMAN ROBERTI: Senator Beverly. 

SENATOR BEVERLY: I'd like you to address the point 
raised about the FBI letter. 

MR. FOLEY: Thank you, Senator Beverly. 

We have worked with the Hazardous Waste Strike Force. 
We continue to work with them. 

It was a decision of the Executive Officer that it 



16 

was not prudent use of his resources to have a man over there 
every two weeks all day long to address issues that were not 
issues of water quality. In some cases they were; in many 
cases, they were not. So, he removed that man from the 
participation but not in furnishing of data, or evidence, or 
cooperation. 

I have personally discussed this with Secretary 
Strock of EPA and said, "If you want the individual back, we'll 
be glad to do it." We felt it was more prudent to use him on 
other things and furnish all information the Strike Force 
needed. 

I think it was a lack of communication more than 
anything else that prompted that letter. 

And again, we are continuing to cooperate, and 
working on a case right now with them. 

I also have to point out, sir, that the Strike Force 
doesn't have, in some respects, the abilities that we have as a 
Regional Board, to put financial penalties, to bring about 
compliance without having to go out and use the spear, so to 
speak. When we have a criminal act, we would certainly refer it 
to that Task Force. But the majority of the actions we -- that 
come before us, we can handle, and we have handled them. Many 
of these are very simple things like failure to report. When 
they cite 200 violations, it's — many of those are simple 
things that we can correct by a letter or a phone call, and we 
have done that . 

I hope that answers your question, sir. 

CHAIRMAN ROBERTI: Senator Ayala. 



17 

SENATOR AYALA: Mr. Foley, these folks here say that 
your Board is the worst violator and the worst offender of EPA 
and federal EPA directives. 

Do you concur with that, that you're the worst 
violator in the state? 

MR. FOLEY: No, sir. I would never even seek 
reappointment if I thought that were the case. 

We probably have some of the most difficult issues to 
address. Our meetings and agenda last approximately eight hours 
each month. There are a great many issues. So, if you measure 
the number of issues, we probably have more than many of the 
other regional boards. 

This situation with the discharge, for example, from 
the outfall serving San Diego, what has occurred there, and it 
is being addressed at our September Board meeting — it was 
brought to our attention just a month ago — the methodology in 
which they compute how much residual solids are in the discharge 
was in error. So, all these reporting periods are now being 
counted as violations, and they are, but they were -- they were 
a methodology that ' s proven to be incorrect and was not accurate 
in the reporting. 

SENATOR AYALA: Whose — 

MR. FOLEY: The City of San Diego that operates the 
Point Loma plant. 

Again, I'm trying to put in context what was stated. 
Yes, there was a violation. Yes, it occurred. We intend to 
correct that, and it was a methodology. 

SENATOR AYALA: I'm not sure you said, but I think 



18 

you mentioned earlier that you don't always agree with EPA. 
What's that got to do with anything? That's the law. You don't 
have to agree; you just have to enforce it. 

MR. FOLEY: Well, the specific that I was referring 
to there was the nutrient level, for example, for phosphate. On 
the discharge from the Eastern plant, and over the mileage that 
would be covered in that discharge before it reached the 
underground basin, there was very compelling evidence by the 
engineering firm that that discharge and the mixing in the 
stream would precipitate that phosphate issue out. 

EPA took the position that, no, at the end of the 
pipe if that's the discharge, that's the way it would be. 

It was a judgment call there, and we, as a Board, 
felt that the evidence was stronger that it would not be a 
problem. 

I might mention, the Marine Corps, the Fallbrook 
Sanitary District, and Eastern Municipal — the three parties -- 
had agreed that this was best for them all. 

CHAIRMAN ROBERTI: Any other discussion or debate? 

If maybe the two groups in opposition could come back 
and respond one more time to Mr. Foley's answers, I'd be 
interested. 

MS. HUNTER: I'll just make a couple of points. 

Mr. Foley mentioned voluntary compliance. And I wish 
I'd have brought it with me, but in the 1987 Auditor General's 
report, it had a specific statement in the summary saying the 
Regional Board needs to take more aggressive enforcement action 
because the voluntary compliance that they have been seeking is 



19 

not working. And I will make sure that all of you get that 
because that is exactly — 

CHAIRMAN ROBERTI: Are they authorized to go beyond 
voluntary compliance? 

MS. HUNTER: The Regional Board? 

CHAIRMAN ROBERTI: Yes. 

MS. HUNTER: Yes. They are authorized to levy fines. 

CHAIRMAN ROBERTI: What year was this report? 

MS. HUNTER: It was in 1987. 

In my testimony — I think you weren't here -- I 
cited that nothing has changed. We did an assessment of the 19 
MPDS permit holders around San Diego Bay found that there had 
been 222 violations and two fines levied. And that was a period 
of five years. So, that's one percent enforcement. 

CHAIRMAN ROBERTI : How is that comparable to other 
regional boards? 

MS. HUNTER: I don't know, because we only have 
experience with our Regional Board. 

But I can tell you that I'm here — this is a very 
unusual step for us to take. We try to — as we've said, we've 
been to the meetings; we try to work with the Board members. 
And we are at the point where we don't know what else to do. 

I mean, there are very seriously wrong decisions 
being made that are not protecting the environment, and we just 
don't know what else to do. 

All the beach closures are not in Tijuana. What 
about the Penasquitos Lagoon, which is a recipient of a sewage 
break from our sewage system? That's miles and miles north. 



20 

Right now the kelp bed is closed because of bacterial pollution. 
That's not coming from Tijuana. 

So, the beach closure is not just the Mexican border 
issue. That's certainly a problem, but that's not the only 
problem that we have. 

And again I'll state that we had almost half of the 
beach closures for the entire state in 1991. 

CHAIRMAN ROBERTI: In San Diego County? 

MS. HUNTER: In San Diego County, yes. 

The other point I want to just touch on is discussion 
— to say that because of the Board's strong action, that the 
Port District has upped their environmental department. 

I think one good action that the Board did take is, 
they named the Port District to a permit, so the Port went out 
and, you know, got an attorney. And now an attorney, instead of 
a biologist or a scientist, leads the Port District's 
environmental program. And that's resulted in one case — Mr. 
Foley wasn't there for this vote -- where the clean-up level, 
because of the advocacy of the two attorneys — one from the 
Port and Mr. Loramie from Peco — they raised the clean-up level 
from 1,000 parts per million to 4,000 parts per million. We had 
to appeal that decision to get it knocked back down to 1,000 
parts per million. And that was an unanimous endorsement by the 
State Board that we were right, and that clean-up level should 
not have been raised. 

So, I think it's good the Port's spending more 
money, but they're spending a lot more money on litigation to 
get out of the clean-up that they need to do. And I think 



21 

that's just a little bit off. 

The last point about the Eastern permit, I want to 
focus on the idea of a chronic toxicity standard that was 
supposed to be in the permit. I sat in the hearing when Eastern 
admitted that they probably would not have a problem meeting 
that standard. And the standard was one PUC per chronic 
toxicity. That was the measurement, and they admitted they 
probably wouldn't even have a problem meeting that standard, but 
they just didn't want it in there. 

So, the Regional Board went back and forth, and back 
and forth. Staff has estimated a thousand hours of staff time 
was spent on that. And then it ended up with EPA having to come 
down and take that permit away. 

One of the reasons the meetings are so long, and 
there are so many issues, is because swift and direct targeted 
enforcement action is not taken. And these folks get their 
attorneys in there, and they haggle on and on, and this is where 
we end up, with a thousand hours on Eastern's permit. It was 
not legal. It was not right. It was not by the laws that you 
made, and then there we are. And that took a lot of time to do 
that . 

So, that's our perspective on what happened at 
Eastern. 

CHAIRMAN ROBERTI: Thank you very much. 

Senator Petris has a question. 

SENATOR PETRIS: We have some extracts from the 
Auditor General's report that you referred to. I wanted to ask 
you if there's been any substantial improvement in certain areas 



22 

cited by the report. 

For example, the report was issued in '87, so it says 



that: 



"As of December 31 [of the previous 
year], the regional board had not reviewed 
or revised within the previous five years 
the requirements . . . for 37 [out] of 54 
dischargers . " 



Also: 



"Thirty-three of 80 dischargers did 

not submit all their required reports 

during . . . . " 
the prior two years. In addition: 

"... the regional board did not perform 25 

of the 160 inspections that it was 

required to perform . . . . " 
There seems to be a shortfall all around here in the inspections 
done, or not done but should have been done, reports filed that 
should have been filed were not filed, and so forth. 

Has your group done any follow-up since the Auditor 
General's report to see if there's been improvement in these 
areas? 

MS. HUNTER: What we did in response to that was this 
1991 review of the 19 MPDS permit holders around the Bay. At 
that point, we found 222 violations. And as Mr. Foley says, 
many of those are, they just didn't file their reports. 

So, the question is, has there — so, no, there had 
not been improvement as of 1991. 






23 

SENATOR PETRIS: What is the penalty for not filing a 
report? 

MS. HUNTER: I think the maximum is like $1,000 a 
day. 

SENATOR PETRIS: Can they revoke their permit? 

MS. HUNTER: Well, they're the Regional Board. They 
can do what they want. I mean, they can take very stiff action 
to get these people into compliance. 

SENATOR PETRIS: Have they ever done that? Have they 
ever revoked -- 

MS. HUNTER: Revoked a permit, not to my knowledge. 
I don't think so. 

SENATOR PETRIS: I remember Senator Hart did a survey 
because he was concerned about lax enforcement in a number of 
areas. He found a very, very low ratio of actions resulting in 
fines compared to the number of violations. And he also found 
that the fines were very, very tiny compared to what the 
authorization was in the statute. 

MS. HUNTER: Yes. 

SENATOR PETRIS: Now, that came out, what, three 
years ago; didn't it? 

MS. HUNTER: I don't know. 

SENATOR PETRIS: I wonder if there have been any 
improvements since then? 

MS. HUNTER: I can't speak to that. I think — 

SENATOR PETRIS: Maybe Mr. Foley can. 

MR. FOLEY: I ' d be glad to address it, Senator. 

One of our methods of bringing compliance is to take 



24 

what could be the fine, the extent of it, and turn that into a 
corrective action that we demand from the discharger. So, your 
records would not show that action as a fine, but in many cases, 
it's the expense of the fine. And that's been the case in many 
of ours. 

We are very hesitant to just fine for the sake of 
fining if we have a way and a mechanism of making that money go 
into a clean-up. So, as a matter of course, that's what we've 
done. So, the record doesn't reflect that as a cornerstone of 
our policy. 

SENATOR PETRIS: Would it reflect the number of 
clean-ups? 

MR. FOLEY: That's right. 

In other words, many of these — Laura's correct. 
There are these violations . But you also have to put on the 
other side of the ledger the corrective actions that have been 
taken. 

For example, in my opening remarks, I alluded to the 
fact that there were 224 violations that we addressed during my 
tenure. And of those, 29 resulted in fines; 116 were clean-up 
and abatement orders that directed the clean-up and were policed 
to be sure that it was accomplished; and 48 of them were cease 
and desist orders, which just says, "You stop doing that." And 
the final group was a time schedule order which gives them a 
particular time schedule to implement a restoration or clean-up. 

So, the number of violations has to be matched 
against the performance that has occurred. In the case where 
you asked if somebody failed to report, the general procedure 



25 

there is to notify them of their failure to report, and they 
immediately comply in most cases. It's normally an 
administrative error. 

We haven't, as a matter of course — we have in many 
fined them $200. That's been the Executive Officer's 
jurisdiction. It doesn't even come to the Board level. 

CHAIRMAN ROBERTI : You ' re saying you may not have 
taken the course of fining violators, but you use the 
methodology of clean-up and abatement, and cease and desist? 

MR. FOLEY: That's correct, sir. 

SENATOR PETRIS: The problem I have with that is, you 
have a company that's just not doing what it's supposed to do. 
And I'm sure there must be a warning letter, there must be some 
conferences, there must be some product, and they still don't do 
what they're supposed to do. Finally it comes to a head, and 
you're either going to fine them or do something else. Now, the 
something else is to go back and tell them to do what they 
should have done, you know, in the first place. 

That seems to me to be an invitation, if I owned a 
company, to stretch out my lack of activity as long as I can, 
because all they're going to do is say, "Well, go back and do 
it. " 

It's nice to have corrective action, but it doesn't 
really encourage me, as a company operating in that area, to 
obey the law. Well, the worst that can happen is that we'll put 
out this money that we should have put out sometime back, 
correct the problem. It might be worse today than it was two 
years ago. 



26 

Maybe that's why there's so many that fail to file 
reports. They figure, what the heck; we can ride this train for 
a long time before they really get tough on us. 

And I can agree that just fining is not as good as 
correcting, but I would impose that correction a lot earlier in 
the day than seems to be the case in these reports, you know. 

MR. FOLEY: I totally agree, Senator. 

I'd like to distinguish between the private firm that 
may be following the scenario you're mentioning. I think we 
would sense that pretty quickly if that attitude is there of 
stretching, and we do look for that. 

In many cases, we're dealing with municipalities. 
One of our concerns there is, a fine on the municipality is 
merely hurting the taxpayer and the rate payer to make them pay 
for the lack of performance on the part of the leadership in 
that municipality. So, we look very hard at that. 

We, again, would rather that money, as you can see, 
go into the correction. And we do direct and we have directed 
those clean-ups. 

So, I totally understand what you're saying. And we 
have to be conscious and cognizant of that fact. 

SENATOR PETRIS: Well, my limited knowledge of San 
Diego tells me, number one, it's one of the most beautiful areas 
we have. Number two, there's a high level of consciousness of 
that fact among the people who live there, and they're proud of 
those resources, and they'd like to have them protected. Some 
of the work that's been done generally in the San Diego area to 
protect Mission Bay and San Diego Bay, and others, has been 



27 

very, very good, and the public supports it very strongly. 

It seems to me if they read one day that the City, 
the bureaucrats aren't very popular anyway, if they woke up one 
day and read in the local newspaper that the City had permitted 
these tons of sludge to keep on pouring in there without doing 
anything about, and finally the Board socked them with a big 
fine, they'd get a double whammy. They'd be angry about the bad 
practice, and they'd be angry about the cost, which eventually 
reaches the individual taxpayer, of the fine and/or the 
clean-up. 

So, I wouldn't distinguish between the private and 
the public. I think sometimes you ought to hit the public 
agency harder than the private to be an example and show the 
way. And say, you know, we'll start with these public agencies 
and hope the private sector will follow. We do it in other 
areas. They're supposed to be a model of following the law and 
doing the right thing. 

MR. FOLEY: I might comment, Senator, and you're 
correct. The City of San Diego, we forced them into a $2 
billion program now of clean-up. This is known as the Clean 
Water Program. This is because of the actions we've taken. 
They built a whole new pump station, a giant pump station, after 
they had repeated spills and violations that Laura's mentioned. 
We forced that issue and fined them significantly. I don't 
recall the number, but it's in the hundreds of thousands. 

So, we have done it when we feel that they're not 
being responsive. 

And I can assure you, this sludge issue is something 



28 

coming before the Board on September 17th, and I think there's 
gong to be some pretty serious action. 

MS. HUNTER: Senator Petris, if I could just add to 
that. 

I was going to mention, I think the City of San Diego 
is of major concern, because I think that many of the Board 
members, because they work with and for and around, and our City 
Council people that are part of — that use the Point Loma 
outfall, or managed like districts, have a very great 
sensitivity about that. Unfortunately, there's people on both 
ends of those pipes. 

And why are we protecting the City of San Diego ' s 
really chronic mismanagement of that sewer system that's 
impacting the tourist industry, the diving industry, the 
swimmers, the surfers? You can't talk to a surfer in San Diego 
that hasn't been sick or had rashes. 

And if we talk about Pump Station 64, I mean, yes, 
the Regional Board levied a fine, and they held — at one of the 
spills at the Pump Station 64, they said, "We're going to hold 
most of it in abeyance unless this happens again. " Well, very 
soon after that another 20 million gallons of raw sewage poured 
into one of our lagoons, and the Regional Board, what I read in 
the record, joined the City in trying to stop that ACO from 
going through at the State Board. 

So, the fine was levied, but it was held in abeyance, 
and I don ' t know that they ever did pay that . In the 
testimony, the attorney for the City was saying, "Well, this is 
a once in a -- you know, a one-time deal." Then it happens 



29 

again, "Oh, it's another one-time deal." Then the outfall 
breaks. Well, guess what that was? It was another one-time 
deal. Meanwhile, we're stuck with these problems. 

So, I would agree with you that the City needs to be 
sent a message, as a lot of these dischargers do, because those 
dischargers that don't comply, don't pay the money to get the 
reports in on time, have a disadvantage against those 
dischargers who are putting the resources into enforcement; they 
are getting the reports in on time. And that's not fair. We 
want to encourage those that are in compliance, not avoid those 
that are in noncompliance. And that is what's happening there. 

MR. FOLEY: I might mention that we are plaintiffs 
with the federal Environmental Protection Agency. We've taken 
the City to court for failure to meed secondary discharge 
requirements. And that lawsuit is being administered by the 
Justice Department at the present time. The City is being made 
to stand tall. 

CHAIRMAN ROBERTI: Senator Ayala. 

SENATOR AYALA: I'm reading from the analysis in 
response to a 1984 report by the Auditor General's Office: 

"... the state board and the nine regional 

boards have established a regulatory 

program that establishes the specific 

workload that the regional boards are to 

meet. In implementing the regulatory 

program, the San Diego Regional Board 

should review and, if necessary, revise 

each of the requirements for dischargers 



30 

once every five years. The regional board 
should also review each discharger's 
reports, inspect each discharger's 
operation from one to three times a year, 
and take prompt . . . action against those 
dischargers that violate water quality 
standards . 

"However, as of December 31, 1986, 
the regional board had not reviewed or 
revised within the last five years the 
requirements for 37 of 54 dischargers. 
Also, 33 of 80 dischargers did not submit 
all of their required reports during the 
calendar years 1985 and 1986." 

And you were Vice Chair of the committee at the time. 
"In addition, the regional board did not 
perform 25 of the 160 inspections that it 
was required to perform of those 
dischargers that pose the highest threat 
to water quality." 

And it goes on and on. It's not very encouraging for that 

Board's actions. 

Can you respond to that? 

MR. FOLEY: Yes, Senator. 

That, again, was prior to my time, but I know we have 

taken correction action — 

SENATOR AYALA: Prior to what, sir? 

MR. FOLEY: Prior to the time I was on the Board. 



31 

SENATOR AYALA: It says you were Vice Chair at the 
time . 

MR. FOLEY: Maybe when the report was rendered, but 
the actions they're talking about are prior to that. 

SENATOR AYALA: In '87, it reported that you were the 
Vice Chair of the Board. 

MR. FOLEY: You were talking about '83. 

SENATOR AYALA: But this overlaps into '84. 

MR. FOLEY: I walked in, and the report was handed -- 

SENATOR AYALA: You walked into that. 

MR. FOLEY: I walked into it. And I can assure you, 
those follow-ups -- that we automated the system; put it on 
computer so they could track it quite carefully. And those 
inspections, to the best of my knowledge, are being made today, 
and that has been corrected. 

MS. HUNTER: One of our concerns over the past couple 
of years is that resources have been tight, and in at least two 
of those years, about halfway through the year, the Board's 
staff members were taken off enforcement completely and put into 
permit writing. And that is -- we protested that. If there's 
no enforcement, what is the motivation to follow your permit? 
And that has been another area of concern, that permitting has 
been frequently given a higher priority than enforcement. 

I guess that's a judgment call, but it's one that we 
vehemently disagree with. 

SENATOR AYALA: In all fairness to the gentleman and 
the Board, it says that the Secretary of the Environmental 
Affairs Agency and Chairman of the State Water Resources Control 



32 

Board agree that the San Diego Regional Water Quality Control 
Board has improved its regulatory program, but they still have 
need for further improvement. I guess they're on the right 
track, I guess, trying to improve their enforcement of these 
regulatory areas. 

CHAIRMAN ROBERTI: Thank you, Senator. 

Thank you very much. 

Mr. Paparian. 

MR. PAPARIAN: The only item I wanted to add related 
to the FBI and the Enforcement Strike Force. 

Mr. Foley indicated that if Cal-EPA was -- had a 
desire for them to reinstitute their biweekly attendance at the 
Strike Force, then they would be willing to do so. 

On the back of the letter we gave you from the FBI is 
a response dated July 30th from Cal-EPA, wherein it says, and 
this is from Cal-EPA: 

"As I indicated, this development is 

quite disconcerting, especially in light 

of the fact that Cal-EPA has expressed a 

desire that enforcement personnel from the 

Agency's constituent boards and 

departments actively participate in 

strike/task forces designed to coordinate 

state, local, and federal enforcement 

efforts . 

"I hope we can resolve this matter 

quickly, and again have your region 

participate actively and constructively on 



33 

the strike force." 
That was July 30th, 1992. 

So, I think that the views of certainly the state 
entities involved here have been made quite clear, that again 
the San Diego Regional Water Quality Control Board has really 
done nothing to reinstitute itself into the Strike Force. 

CHAIRMAN ROBERTI: Thank you very much. 

I'm speaking only for myself, Mr. Foley. I tend to 
think that the enforcement has been a little bit on the lax 
side. 

Your qualifications are very good for this Board, but 
I'm a little nervous that this District seems to have been 
weaker in enforcement. 

I'm speaking, as I said, only for myself. 
Personally, I would like to see you get confirmed, but I just 
don't think the record warrants a vote from me. It's just a 
little bit too weak. 

I want you to know why I'm going to be voting the way 
I'm going to be voting. I don't know how the others are going 
to be voting. 

Do I hear a motion? 

SENATOR CRAVEN: I'll move. 

CHAIRMAN ROBERTI: Senator Craven moves confirmation. 

Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 



34 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: No. 

SECRETARY WEBB: Petris No. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti . 

CHAIRMAN ROBERTI: No. 

The vote is three to two; confirmation is recommended 
to the Floor. 

MR. FOLEY: Thank you, sir. 

CHAIRMAN ROBERTI: Mr. John J. Lormon, Member of the 
California Regional Water Quality Control Board. 

Let me suggest we break for five minutes. 
[Thereupon the Rules Committee 
took a brief recess.] 

CHAIRMAN ROBERTI: The Committee will come to order. 

The next appointment is that of John J. Lormon, 
Member of the California Regional Water Quality Control Board, 
San Diego Region. 

Mr. Lormon, please come forward. We will ask you 
what we ask all the Governor's appointees, and that is why you 
feel you're qualified to maintain this position? 

MR. LORMON: Thank you, Senator. I appreciate the 
opportunity to be here. 

I believe that the qualifications come from a couple 
of different sources. One are on a personal level. I've very 
much been active in environmental issues and enjoy the outdoors. 
And having lived near the water most of my life, and lived in 
Alaska for a while, I've had occasion to partake of those 



35 

natural resources, and I appreciate them. 

On a more vocational level, the work that I do 
involves environmental compliance, legal counseling to 
individuals and business entities. And in that regard, I'm 
involved in trying to advise companies not only on complying 
with the laws, but having programs that include environmental 
excellence and enhance the environmental component of their 
business operation. It's a view that I hold that it's wise not 
only for the environment, but it just makes good business sense 
to have strong environmental programs . 

So, from that experience, I've had an opportunity to 
work with the water laws, and to come to a pretty good 
understanding of what they are, what they require, and have a 
great and deep respect for them. 

Essentially from those two sources, I think I have 
some qualifications to continue to serve with this Board at this 
Committee's pleasure. 

CHAIRMAN ROBERTI : There have been some questions 
that have been raised regarding a possible conflict of interest. 

You're an attorney. Do your clients include any 
persons or entities that are subject to regulation by the State 
Board or by the Regional Board? If so, how do you conduct 
yourself? 

MR. LORMON: The answer is yes, there are clients 
that are subject to those jurisdictions. 

The way I conduct myself has been, it's been a 
learning process. I've only been on the Board since February 1 
of this year, so I've had six meetings that I've participated 



36 



in. 

And as I've worked my way through that, I abstained 
from participating in an action where there has been a client 
involved. In some instances, that is in the early days, 
including informational items I didn't realize I didn't need to 
avoid participating in, and many consent items. 

So, the result has been that I have avoided 
participating in some matters. 

CHAIRMAN ROBERTI: Right now, I guess, under federal 
and state law, it's defined as a significant portion of your 
income would be 10% or more of gross personal income for a 
calendar year, except that it means more than 50 or more if the 
recipient is over 60 years of age, in which case, I guess, you 
would have to recuse yourself from participation. 

Is that the case with you as far as people who are 
permittees or applicants? 

MR. LORMON: Yes, it is the case, both the federal 
and state law require that. 

And at the time that the appointment was under 
consideration, and since that time in preparation for this 
meeting, I had occasion to review that issue in detail. What I 
did is, I compared the firm's gross income with the income from 
all the permit holders or applicants for permits, and made a 
determination as to whether or not I was qualified or 
disqualified under that law. And I fell below the standard of 
10%. 

CHAIRMAN ROBERTI: I want to stress, I do not have 
anything in the file where there's any accusation against you, 



37 

that you have violated any conflict of interest statute, but I 
thought it was important for the record to have that up front . 

I may think that the standard is lenient, but whether 
that's the case or not, the issue in regards to you, I think 
it's important to say, to my knowledge hasn't been violated. 

Senator Petris . 

SENATOR PETRIS: When you recuse yourself in a 
particular application, do you rely on someone in particular to 
guide you, or as a lawyer do you make your own judgment? 

MR. LORMON: Well, I relied on a variety of sources 
in the general sense, Senator. 

First I had meetings with the State Water Board's 
Assistant General Counsel, and the Regional Counsel assigned to 
our District. We reviewed a variety of documents to make a 
determination on qualification and the rules as to recusal in 
each instance. 

Furthermore, we have within our law firm an attorney 
that's sort of our Father Confessor that deals with our ethics 
issue, and we're very strict in that regard, and we take that 
very seriously. I have conferred with him, and then I make my 
own determination as to each matter. 

SENATOR PETRIS: Well, I see a real quandary here. 
On the one hand, there is this strong possibility of conflict 
hanging over your head. On the other hand, you're very 
conscientious about it. According to the information I have, 
you have not participated 14 times because of that over a 
certain period of time. And some counsel, I don't remember who, 
concluded that you really only had to do it four times. 



38 

So it looks to me like you're leaning over backward 
to make sure you don't get yourself into a conflict mode, but 
the more you refrain, the more the agency is weakened by not 
having all of its members participating. Do you know what I 
mean? 

The cleaner you are, and the more you stay out of 
decisions, the more it weakens the intent of the statute, which 
is to have X number of persons working on this on every 
decision. 

So, that presents a real quandary to me. You've got 
yourself in a bind there which, to your great credit, is 
motivated by a very, very strong desire not to be involved in 
any conflict. 

Do you see what I'm saying? Maybe you're, by 
definition, in such a situation because of your practice that 
you're just going to continue to have conflicts as long as 
you're on the Board. 

MR. LORMON: Would it be helpful if I compared that 
to the total number of agenda items? 

SENATOR PETRIS: Yes, it's 85 in that time period; 
isn't it? 

MR. LORMON: No, there have been 185 which, on — 
during these first six meetings, I've been trying to apply the 
facts to the very complicated regulations, and I took a very 
conservative approach. And as I've worked my way, received 
additional guidance from the State Board's Counsel, that number 
of -- actually, it's 15 that I count, not 14. Of that number, 
which is about 8%, if — the actual number that I would have had 



39 

to miss was more in the 2-3% range. 

I mean, if somebody's out with -- you know, over the 
life of that number of meetings, if you missed one meeting, 
you'd miss a lot more than that. 

And so, I think in the future, as I better understand 
the rules, that the frequency will be more in the 2-3% range 
based on experience than in the 8% range. 

SENATOR PETRIS: On the other issue, you heard the 
comments regarding the overall record of the Board, and the fact 
that nearly all the decisions are unanimous. So, anybody on the 
Board shares the blame for a lack of action, if there is any. 

Can you respond to some of the points that were 
raised earlier regarding the Auditor General's report? That was 
way before you went on; I realize that. And the exclusion from 
the federal task force for failing to participate, and so forth, 
some of these other items. Do you have any comment on those? 

MR. LORMON: Well, they all were before my -- my 
participation on the Board. 

I could add that since I've been on the Board, there 
haven't been that many clean-up and abatement activities, but in 
one instance I pushed for an increase in the fine that was 
recommended by staff. And that was ultimately adopted by the 
Board, because I felt it was appropriate. 

SENATOR PETRIS: Which one was that? 

MR. LORMON: It was Ramona Water District. 

SENATOR PETRIS: How about the City? 

MR. LORMON: I haven't participated in any City 
enforcement matters, so I don't have any -- 



40 

SENATOR PETRIS: There haven't been any since 
January, when you got on? 

MR. LORMON: Not that I can recall, Senator. 

CHAIRMAN ROBERTI: Any other questions? Senator 
Ayala. 

SENATOR AYALA: Mr. Lormon, I'm not quite clear 
whether your answers to Senator Roberti and Senator Petris 
indicated that you were no longer associated with a client that 
might come under the regulations of the State or Regional 
Boards . 

Do you still have clients that you represent that 
could be subject to these regulations? 

MR. LORMON: Yes, I do. 

SENATOR AYALA: And do you intend to retain those 
clients while you're serving the Board as well? 

MR. LORMON: I don't have many clients that are 
subject to Board regulation, and where they are in front of the 
Board, I wouldn't participate in those matters. 

I have taken a broader view than I was required to in 
my recusal activity in regards to matters that came before the 
Board. And there are some instances where I could have 
participated, and I will in the future. 

SENATOR AYALA: So, you do represent clients that 
might prohibit you from participating during one of the Board 
meetings on a given subject matter because they could be 
involved with a conflict of interest with you? 

MR. LORMON: Yes. 

SENATOR CRAVEN: Ruben, are you referring to the 



41 

conflict, basically? 

SENATOR AYALA: Yes. 

SENATOR CRAVEN: Well, you know, I just read this 
thing here. I don't think we have to concern ourselves too much 
about the investment, or $1,000; that's not his end of it. 

His would be what he would gain in return from 
employment, his employment. 

He's with San Diego's biggest law firm, I think. He 
is one of about probably 150 attorneys. That's a big law firm. 

And, you know, you have to break it down rather 
miniscule to think how much he's going to profit, you know. 
Maybe get a roll of stamps, or something. It's almost 
ridiculous . 

What he's doing, he's gone out of his way to try to 
stay on the upper high side, which is fine. As Nick said, 
that's to his credit. 

CHAIRMAN ROBERTI: And credit to him, he's gone out 
of his way, and it's probably made it look like a bigger issue 
than it is . 

SENATOR CRAVEN: That's the point that I was getting 
to . 

MR. LORMON: That's the irony, Senator. 

CHAIRMAN ROBERTI: I sort of sympathize with you. 
We'll get to your votes later, but I sort of sympathize with the 
conflict of interest problem because we all experience those 
kinds of things when we have to make our decisions here. It's 
very, very difficult. 

Actually, I commend you for bending over backwards. 



42 

But in doing so, you just made the issue bigger. 

Senator Ayala. 

MR. LORMON: I used the "one cent standard" when I 
could have used — if there was one penny to the firm, I didn't 
participate. And under the rules for a particular matter, it 
could be $250, and so I've taken a very broad view. 

SENATOR AYALA: You're trying very hard to avoid a 
conflicting case. 

MR. LORMON: Yes. 

CHAIRMAN ROBERTI: Is there anyone here in 
opposition? 

SENATOR CRAVEN: Again? 

CHAIRMAN ROBERTI: Ms. Hunter. 

MS. HUNTER: What I want to start with, we did not 
oppose Mr. Piersall, who was also a nominee, so I don't want you 
to think this is a blanket attack. 

Again for the record, my name is Laura Hunter. I'm 
Director of the Clean Bay Campaign and Environmental Health 
Coalition. 

Although this is Mr. Lormon's first appointment to 
the Board, we have some real concerns related to some of the 
issues you've been talking about, and some of the folks that -- 
the reason we have polluted water, and a Bay clean-up, and Bay 
toxics protection is because his clients have been out there not 
taking care of business very well. 

I want to clarify one thing right away. I don't know 
where Mr. Lormon gets the 185 issues number. I have the agendas 
right here, and I added them up. And the only way you can get 



43 

anywhere near 180 issues is if you count "Call to Order" as an 
issue, "Adjournment" as an issue. 

CHAIRMAN ROBERTI: Count what as an issue? 

MS. HUNTER: "Call to Order" as an issue, and 
"Adjournment" as an issue, and "Public Forum" as an issue. And 
that was the only way. 

And also, from these agendas that he's been on since 
February, 30 of these items have been pulled and never appeared 
before the Board. So, I think it's misleading to say that there 
have been 185 issues before the Board. We've been at those 
meetings, and there haven't been 185 issues. 

There have been 87 actions, with 11 executive 
sessions. I don't know if Mr. Lormon recuses himself from the 
Peco Terminal's and the Port District's executive sessions, 
because we don't have access to that kind of information. So, I 
think it's misleading to say there 've been 185 issues, and I 
just wanted to clarify that. 

Mr. Lormon -- there's lots of attorneys, as you can 
imagine, in San Diego, but Mr. Lormon is one of, if not the 
leading, environmental defense attorney, I guess you'd have to 
call him. He's had many clients that do have permits, that have 
appeared before the Board, that will appear before the Board. 

And I think we're not talking little R.V. camp 
grounds here and there that have some little septic tank that 
has a permit. We're talking major clean-up orders in San Diego 
Bay. The three that are underway right now are: Teledyne Ryan, 
Convair Lagoon, and Commericial Basin as Driscoll Boat Yards as 
part of the clean-up team. All three of those, I think, have 



44 

caused Mr. Lormon to properly recuse himself, and we appreciate 
the fact that has done that, but those will be coming up many 
more times in the future. And those are very important to us. 

If we want a viable, ecologically sound Bay, we need 
to move ahead with these, and he's not going to be there. And 
we're not going to have the representation. 

The other conflict that's of major -- 

SENATOR CRAVEN: May I interrupt you? 

MS. HUNTER: Sure. 

SENATOR CRAVEN: At the time that he is not going to 
be there, which you regret, as I understand your remarks, is 
that a public hearing? 

MS. HUNTER: Yes. 

SENATOR CRAVEN: You will be there? 

MS. HUNTER: Yes. 

SENATOR CRAVEN: Then, I feel very, very comfortable. 

MS. HUNTER: I can't vote, though. Maybe if I could 
have his vote -- 

SENATOR CRAVEN: I know, but you've got to be an 
influencing factor. 

MS. HUNTER: The other issue that is of concern to us 
is this whole relationship with the Strike Force. If you 
remember, the Strike Force goes after the chronic criminal 
violator. I think we all agree, those are the folks that we 
want to come into compliance. 

Mr. Lormon or his firm, according to my discussions 
with the Strike Team members, have represented Western Salt, 
Sorrento Ready Mix, Stanley Steamer, General Dynamics, either 



45 

Dyabil or Genardi — they were, I guess, tried together; they 
weren't sure which company that was. And currently two cases -- 

SENATOR PETRIS: Is Stanley Steamer still around? 

MS. HUNTER: They're still around. 

SENATOR PETRIS: Not the automobile. 

MS. HUNTER: Oh, no. It ' s a carpet cleaning company. 

SENATOR CRAVEN: It's spelled a little differently. 

MS. HUNTER: The Regional Board already has a black 
eye in this area, and we're very concerned what happens when, 
hopefully, this will work out; the Regional Board will get back 
in the Strike Force. And now we have a member of the Regional 
Board who has represented and defended many of these -- these 
defendants, I guess is what you call them. 

I guess technically, it's not a conflict of interest. 
Ethically and in common sense tell you that this is not good 
policy. 

Mr. Lormon fulfills the undesignated public slot on 
the Board. I know it's the Governor's discretion, but again, I 
think he represents a segment of the public and maybe not all of 
the public. That would be the indication to us that we're 
worried about. 

In February, Bill Carter from Cal-EPA came down to 
address the Regional Board about his concern that they had been 
removed from the Strike Force and not been replaced. Mr. Lormon 
raised some issues with him that he felt that the cases that 
were gone after — and you can correct me if I'm wrong; I 
listened to the tape a few days ago -- were not good cases; were 
not the best cases. And while you supported the Strike Force, 



46 

you felt that the cases so far did not represent the best cases 
that could be brought. 

Well, there have been a lot of cases brought, and I 
think our Strike Force is doing an excellent job bringing those 
cases. And I guess I would disagree with that. 

So, anyway, thank you. 

CHAIRMAN ROBERTI: Mr. Paparian. 

MR. PAPARIAN: Mike Paparian representing the Sierra 
Club. 

As I understand the legal field, there's a number of 
firms that specialize in issues, or sometimes several issues. 
If you're in a certain area of the state, you might specialize 
in defending publishers of newspapers, or auto insurance 
companies, or school boards, or whatever. 

If You're in San Diego, and you are a discharger of 
substances into water supplies, and you need outside counsel, 
there ' s a very good chance you ' re going to wind up at Mr . 
Lormon ' s law firm. Not only are you going to wind up at Mr. 
Lormon ' s law firm, you're going to wind up in the unit being 
represented by, if not Mr. Lormon, somebody within Mr. Lormon ' s 
unit, the unit that he heads up at his law firm. 

I don't question Mr. Lormon being a fine individual. 
I wouldn't mind him being my next-door neighbor. 

But I question whether someone who does in fact 
represent a number of clients who are dischargers of substances 
to the water supplies, sitting on the regulatory body that 
regulates discharges of substances into water supplies. 

Now, I don't question that his firm of however many 



47 

attorneys -- Mr. Craven thought it was over a hundred. 

SENATOR CRAVEN: I said 15 0, I think, Mike. I think 
that ' s about what it is . 

MR. PAPARIAN: Yes — receives less than 10% of the 
firm's income from people who have business before the Regional 
or State Water Board. 

I don't know, and we don't have access to — given 
the nature of some of the filings, how many of the — how much 
of the firm's income that is generated as a result directly of 
Mr. Lormon ' s work actually comes from people who have business 
before the State or Regional Board. That would concern me if 
more than 10% of the income that he actually generates, or the 
10% of his billable hours, actually come from clients who have 
or may have in the future business before the Regional or State 
Water Board. 

I'm not making an accusation. It's just something 
that I do not know based on the information we've been able to 
see form the public records. 

In any event, even if that amount is less than 10%, I 
do question someone serving in the public position on a regional 
water board being someone who generates a portion of his 
business representing clients who discharge into water 
supplies . 

CHAIRMAN ROBERTI: Thank you, Mr. Paparian. 

SENATOR CRAVEN: Mike, I understand your philosophy. 
I think your point's well taken. 

But don't you think it's entirely possible that he 
loses money by virtue of being on that Board? He can't 



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48 

represent all of these people who are just longing to hire him 
to represent them by virtue of a conflict of interest. So, he 
recuses himself. 

So, you know, I don't see where he's making money by 
virtue of that. I think he's losing money by virtue. He's 
making a big $100 a month on that, or per diem. Yes, per diem; 
that's the way to say that. That's a lot of money. 

I don't imagine there ' re many attorneys in that firm 
who work for $100 an hour, but there may be some. They probably 
work the Xerox machine. 

CHAIRMAN ROBERTI: The objections to Mr. Lormon do 
not appear to go to his voting record. They appear to go to the 
serious question of conflict. But it just doesn't strike me 
that Mr. Lormon has made himself conflict bait. I mean, he 
appears to have gone in the other direction. 

If we're talking about philosophical perspective, 
taking somebody from a firm that is discharge defense oriented, 
well, maybe I don't like that. If I were a Governor, I probably 
wouldn't make that appointment myself, but I'm tending to think 
that that is the range that the Governor's entitled to. 

In reviewing Mr. Lormon ' s resume here and listening 
to him, I just think he's bent over backwards to avoid doing 
anything that even would appear to be in error. 

Now the question is one of philosophy, maybe, and 
then the other question is of votes, but I haven't heard 
anything yet — 

SENATOR CRAVEN: Well, you know, there's one way to 
settle this, Mr. Chairman. One way to settle this, as far as 



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49 

I'm concerned, is go out and find yourself a bunch of amateurs; 
real AAU people who don't know pork from cheesecake, and put 
them on there and let them make these technical decisions. And 
they don't have any conflict of interest because nobody's ever 
going to hire them. That's for sure, because they don't know 
anything about it . 

Let ' s not diminish the fact that people have an 
expertise and can exert it, and some of those people are even so 
altruistic they recuse themselves so there is no coloration of 
conflict at all. 

I think that has to be taken into consideration. I 
think that should be an applauded thing, not something to be 
criticized. Something to be encouraged. 

CHAIRMAN ROBERTI: I think you've make your point, 
Senator. 

Any other questions? 

Is there anyone else in the audience either in 
support or opposition? 

Do I hear a motion? 

SENATOR CRAVEN: Move. 

CHAIRMAN ROBERTI : Senator Craven moves . 

Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 
Senator Craven. 



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SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 

CHAIRMAN ROBERTI: Aye. 

The vote is four to zero; confirmation is recommended 



to — 



SENATOR PETRIS: Petris Aye. 

CHAIRMAN ROBERTI: The vote is five to zero; 
confirmation is recommended to the Floor. 

MR. LORMON: Thank you very much. 

CHAIRMAN ROBERTI : Congratulations . 
[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
3:51 P.M. ] 

--00O00 — 



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51 
CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand 
this Q/ s*^ day of August, 1993. 



VELYN^J. mTKK j> 
Shorthand Reporter 




239-R 

Additional copies of this publication may be purchased for $5.00 per copy 
plus 7.75% California sales tax. 

Senate Publications 

11 00 J Street, Room B-1 5 

Sacramento, CA 95814 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Senate Publication Number 239-R when ordering. 



L50O 



W 



HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 3191 

SACRAMENTO, CALIFORNIA 






WEDNESDAY, SEPTEMBER 8, 1993 
2:42 P.M. 

DOCUMENTS DEPT. 

NOV 1 6 B93 






240-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 
ROOM 3191 
SACRAMENTO, CALIFORNIA 



WEDNESDAY, SEPTEMBER 8, 1993 
2:42 P.M. 



Reported by: 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 
MEMBERS PRESENT 
SENATOR DAVID ROBERTI , Chair 
SENATOR WILLIAM CRAVEN, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR ROBERT BEVERLY 
SENATOR NICHOLAS PETRI S 

STAFF PRESENT 

CLIFF BERG, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

RUSSELL S. GOULD, Director 
Department of Finance 



Ill 

INDEX 

Page 
Proceedings 1 

Governor ' s Appointee ; 

RUSSELL S. GOULD, Director 

Department of Finance 1 

Background and Experience 1 

Questions by SENATOR PETRIS re: 

Importance of the Commission on State 

Finance 6 

Department of Finance's Position on 

Eliminating the Commission 7 

Commission First to Alert Legislature on 

Depth of Recession in California in October 

of 1991 8 

Commission Reported Governor's Budget Proposal 

Was Out of Balance in January of 1992 8 

Commission Reported that Governor's Budget 

Proposal Was Out of Balance in January of 1993 8 

Dialogue between Department of Finance and 
Commission on State Finance 9 

Main Source for Forecasts 10 

How Department Will Close Gap 11 

Origin of Health and Welfare Projections .... 11 

Motion to Confirm 12 

Committee Action 12 

Termination of Proceedings 13 

Certificate of Reporter 14 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN ROBERTI: Next is the confirmation of Mr. 
Russell Gould, Director of Finance. 

We will ask you — you've been through this before. 

MR. GOULD: Yes, sir. 

CHAIRMAN ROBERTI: We'll ask you what we asked you in 
the past: why you feel you're qualified to assume this 
position? 

MR. GOULD: I appreciate the opportunity to be here, 
Mr. Chairman and Members. It's a pleasure to be with you again, 
actually. 

It was just a little over a year ago that I was 
confirmed to the Secretary for the Health and Welfare Agency, 
and I believe it's that experience, of running the Health and 
Welfare Agency, in conjunction with my previous financial 
experience, that really provides for the balanced perspective 
necessary to be Director of Finance. 

In terms of my education background and early years, 
I'm a native Californian. I came through the public school 
system, the community college system, and ultimately through the 
University of California at Berkeley. 

In terms of my professional experience, I take pride 
in the fact that I'm a career civil servant. I actually began 
my public service as a Sergeant at Arms for the State Assembly. 
From that point and after graduating from the University of 
California at Berkeley, I entered state service and grew to 
management positions in a variety of state departments in both 



personnel/labor relations and financial management. 

In 1983, I was appointed to the Department of Finance 
and spent approximately seven years there. I rose through 
various management assignments in the Department, including 
Chief Deputy Director for the Department for the last three 
years . 

There two key areas of my responsibility I'd like to 
focus on. First, labor relations, I worked with the labor 
unions throughout California in trying to deal with changes, 
innovative changes to the compensation programs, including the 
installation of the first flexible benefits program for state 
employees. In addition, I worked with the State Teachers to 
modify the State Teachers Retirement System to provide for a 
more solid benefit structure and a financially solvent system. 

I also had primary responsibility for local 
government affairs. I was the lead on issues such as the trial 
court funding bill. But most importantly, I tried to assist 
local government in a wide variety of issues that were placed 
before them. As you know, the relationship with local 
government is very complex. We have many shared programs, and 
the administration of those programs is critical to the delivery 
of coherent and effective programs at the local level. 

Today, I was working with a newly appointed 
Governor's Local Policy Council — Local Government Policy 
Council to take a look at some of the issues we will be facing 
in the next couple of years. I believe that the experience I 
have gained in the Department of Finance and in Health and 
Welfare in the local government area will assist me as we try to 



unravel some of the difficulties we have in local government. 

Additional financial experience I've had included 
almost a year at the State Treasurer's Office. I served there 
as Assistant State Treasurer, and alongside the State Treasurer, 
and I had direct responsibility for the management of 
California's $20 billion investment portfolio. I was in charge 
of all bond sales for the state and created the state's first 
College Savers Program. 

Both at the Department of Finance and at the State 
Treasurer's Office, I was appointed to represent the state in 
national, state, and local forums, including representing the 
state before bond rating houses . I also had the opportunity to 
serve on the National Association of State Budget Officers. I 
served three years on their Executive Committee; I chaired their 
Health, Social Services, Education Committee and the Financial 
Management Committee. I was selected to be president-elect of 
that Association before being given the opportunity to serve as 
Secretary of Health and Welfare under Governor Wilson. 

During the period of time I served in Health and 
Welfare, I believe that I learned a great deal. I supervised 
eleven departments, approximately 44,000 employees, with a $16 
billion General Fund budget. 

There are three program accomplishments that I would 
like to highlight from the period of time I was in Health and 
Welfare. These are programs that we were able to work together 
on, the Legislature and the Administration, and I believe that 
they will stand for some time as important changes within Health 
and Welfare. 



The first is state and local program realignment. In 
that, in the first year of the Wilson Administration, we worked 
together to send counties funding along with health and welfare 
programs. We put into place flexibility so that locally elected 
officials could make determinations as to what kinds of programs 
made sense for their communities. I think that program is still 
effective, and we're seeing better results as a result of the 
program realignment/restructuring . 

The next area is in welfare reform. I think that 
through the negotiations this year, that we have done a great 
deal to promote self-sufficiency for those people who are on aid 
in California. I worked closely with Senators Thompson, Leslie 
and Watson, and Assemblypersons Bates and Andal in order to 
negotiate the changes that we were able to achieve this year . 
The most important thing I believe we achieved was a return of 
work incentives to the program, where people on aid can go out 
and earn income and retain some of that, so there's an incentive 
to help support their families. 

We invested more dollars under education and training 
through a program called GAIN. We increased our support for 
child care, recognizing that's an important feature in support 
of work efforts. We also instituted the Cal-LEARN program which 
provides an opportunity to assist young people with children who 
are on aid to complete their high school educations so they can 
be successful in the future. 

And the last area is, we did try to beef up the 
welfare fraud provisions so as to assure that people who were 
getting aid were the right individuals . 



The last area I'd like to mention under Health and 
Welfare are the prevention programs. I think collaboratively, 
we have worked together, and I'll just mention three of them 
that I think will be very effective: the AIM program, Access 
for Infants and Mothers, which provides prenatal and well baby 
care to low income women and children; early mental health 
counseling for children, kindergarten through third grade; and 
the Healthy Start program, where we integrate services, 
recognizing that the whole child needs services if they're to be 
successful in school. I think all of these programs were 
designed, recognizing that kids need good preventive care to get 
a head start so they can be successful as they go through school 
and the rest of their lives. 

I'm pleased that — with these accomplishments, 
because I think we worked effectively together, and I think we 
did it in a time when California faced the most challenging 
financial times we have ever faced. 

In summary, the financial experience I have had, and 
the real world experience of running the Health and Welfare 
Agency, give me a balanced perspective from which to serve as 
Director of Finance. I have no illusions that the assignment 
will be an easy one, yet I feel much can be accomplished if we 
commit to working together to approach issues squarely, to make 
tough choices that we will continue to face. 

I believe we have worked effectively together in the 
past, and I look forward to continuing to work with you as 
Director of Finance. I'd be pleased to answer any questions you 
might have. 



6 

CHAIRMAN ROBERTI: Any questions of Mr. Gould? 
Senator Petris . 

SENATOR PETRIS: In the current fracas between the 
Governor and the Finance Commission, the Commission on State 
Finance, some of us who've been here a hundred years or more, 
which includes me, have seen the Department really miss out on a 
lot of its projections from time to time, and its forecasts, 
analyses, and so forth. And I know through the years that even 
though they get more efficient, assuming they do, and even 
though the margin of error might drop each year, when the budget 
is so huge, a small error looms very large on the ground. It's 
hundreds of millions sometimes. 

I have found this to be true through the years . It 
doesn ■ t matter who the Governor is , or which party is in the 
Governor's Office. It just seemed there are certain problems, 
undoubtedly due to the nature of the beast, you know. You just 
have a very, very tough job, and I want to be the first to 
acknowledge that. 

But the fact is that it seems to me that the work of 
the Commission has been very helpful, not only in the 
projections, but in the overall picture. I don't think it was 
ever intended as a rival to the Department of Finance. It's a 
citizens group. It does have staff which has given us some very 
helpful reports in the Legislature. I wouldn't like to see that 
be removed. 

I understand the Governor withdrew the money from the 
budget. I don't know what form the current dispute is in. 

I would like your reaction, and I don't want to put 



you in conflict with the Governor. But is it the Department's 
position that the Commission doesn't serve any useful purpose, 
or is it 100% duplicative, or what is the basic problem? 

MR. GOULD: Well, Senator, I think first of all, I 
think we could stipulate that revenue forecasting is one of the 
most difficult things that we have to do. And the marginal 
difference, as you indicated, makes a tremendous difference in 
the decisions that you have to make in the budget and what 
programs you can fund. 

I think in looking at the Commission, I'm aware that 
they have submitted a request to the Department of Finance and 
to the Governor to continue. I think the things to be looked at 
is, number one, what specific functions do they anticipate 
continuing? And that's what I've asked my staff to look at. 
And also, what the funding source that they plan on having. As 
I understand, they're expecting to have reimbursements. I think 
we need to look at the source of those reimbursements and see 
where that ' s coming from to make sure that there is an 
appropriate funding source. I'm willing to look at that. 

I think the Governor was very sincere in working with 
you in the elimination of many boards and commission. I think 
there was well over 100 that have been eliminated in the last 
couple of years . 

And so, we would take a look at this and reassess 
what they're suggesting to see if, in act, it continues to be 
duplicative, which was our assessment initially. 

SENATOR PETRIS: All right. Let me give some 
examples, according to my excellent staff work here. Not mine; 



8 

the Committee ' s . 

I'll give an example where the Commission did well, 
and I'm sure there are examples where they missed the boat, too. 
I don't know the whole story. But in October of '91, the 
Commission was the first to alert the Legislature of the depth 
of the recession and its impact on the state budget. 

Now, at that time, as I remember, we were in big 
trouble. The Governor's budget painted a very rosy picture of 
income based, in turn, on its confidence in the national budget, 
which also was over-optimistic at the time, and painted an 
equally inaccurate picture of the need for social services. You 
know, they're kind of tied together. If you expect a lot of 
prosperity, there are going to be a lot of jobs; unemployment 
will be very low in comparison to the bad years, so the need for 
social services to help the unemployed goes way down. So, the 
two go together. If you're going to predict an overly 
optimistic year on revenues, you're going to have an overly 
pessimistic year on need for services. So, it gets you with a 
double whammy. That's why I point this out as an important 
example. They were ahead of Finance and differed with Finance, 
and they were ahead of the Legislative Analyst on whom we also 
rely in explaining the depth of the recession and the impact on 
the budget. 

And the following year, in January, they reported 
that the Governor's new budget proposal was $16 billion out of 
balance — excuse me, $6 billion out of balance. And in January 
of this year, they reported that it was more than $2 billion out 
of balance, and we learned in both cases that was close to the 



mark at the time it was made. 

So, those are only three examples in the last couple 
years of where their work has been useful and helpful . 

Now, we all have our own loyalties. If a Member of 
the Legislature feels more confident in the Department of 
Finance, they're going to reject the other people's 
recommendations, or rather, projections and go with Finance. 
But if Finance is off and we all go with Finance, then we make 
serious miscalculations and don't plan accordingly. 

Again, this is all tempered by what I said in the 
first place, and which you confirmed. A tiny error comes out to 
many millions of dollars when it hits the ground, and we 
understand that. But that's what makes forecasting all the more 
critical in a bad year. 

Now, the other question I had was, do you compare 
notes, maybe on the Q.T., with the staff, call up the 
Commission, and does the Commission call your people and say, 
"Hey, we've got a big blip here on the radar screen. We see, 
according to PG&E ' s estimates of the connections that we ' re 
going to be way up in the next year. Are you getting the same 
thing?" "Well, no. The telephone company tells us just the 
opposite. " 

I mean, does that kind of dialogue go on, or is it 
totally and separately isolated from each other? 

MR. GOULD: I think the reality is that the 
information available for forecasting is available to all 
parties who are looking at it, so there are really no secrets 
out there. And so, the information that the Commission looks at 



10 

is the same information that Department of Finance has to look 
at. So, I don't think there's really any mysteries in terms of 
what ' s out there . 

It doesn't make the job any easier in terms of 
forecasting, but I think that all the information is really 
readily available to all parties. 

SENATOR PETRIS: Is there any one source that's kind 
of relied on by everybody, like, say, the UCLA forecasting? 
Does that have some kind of higher status or higher degree of 
confidence? 

MR. GOULD: Actually, one of the things that the 
Department of Finance does every year is bring together a group 
of economists from industry, from the academics, and to really 
look at a broad view of how different groups look at 
California's economy, the national economy, and to have some 
perspective about where collectively we see California going. 
So, we bring all the parties together in order to share 
information and to — and that's done in confidence, because we 
get the perspective of some of industry's thinking as well, 
which they want to keep private. But we do get a broad 
perspective about where they see California going. 

So, we try to reach out to economists throughout the 
state and the nation to get our best judgment s to predict the 
future . 

SENATOR PETRIS: I guess there have to be some 
difference, otherwise your predictions would all be exactly the 
same. 

MR. GOULD: That's right. 



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SENATOR PETRIS: So, I'm wondering, in view of the 
fact that they've had a pretty good track record, if we get rid 
of them, how is your Department going to close the gap when we 
don't have the benefit of their prediction? 

MR. GOULD: Again, Senator, I have — 

SENATOR PETRIS: You're going to have to hire some of 
their people, or what? 

MR. GOULD: No, I think within the Department of 
Finance, looking at the prior role that the Commission had, I 
think the view was that it was duplicative. 

I think we ' re going to look at what they ' re 
suggesting. I have not seen their new proposal. 

But I think there have been a number of difficult 
decisions as we reduce boards and commissions throughout the 
state. There are well over 100 of them that have been reduced 
in the last couple of years . Many of them had functions that 
might be nice to have. We just have to access the net benefit 
of having them when we do have other functions that perform 
similar activities. So, we'll have to look at that, and I'm 
willing to do that. 

SENATOR PETRIS: On the Health and Welfare 
projections, does that come out of Finance or does that start 
with the Health and Welfare Department itself? 

MR. GOULD: It starts with Health and Welfare, but we 
work with the demographics unit of the Department of Finance, 
who can give us some long-term trends in terms of how they see 
demographic changes influencing the number of children, the 
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themselves of various services. So, we work together. 

SENATOR PETRIS: Do you have any predictions for next 



year' 



now. 



MR. GOULD: My crystal ball is a little hazy right 



SENATOR PETRIS: A little cloudy? 

MR. GOULD: Yes. 

SENATOR PETRIS: I'll withdraw the question. That's 
all right. 

MR. GOULD: I appreciate that. 

CHAIRMAN ROBERTI: Is there anyone here in opposition 
to the appointment? I don't see anyone. 

Is there a motion? 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN ROBERTI: Senator Beverly moves confirmation 
be recommended to the Floor. 

Secretary will call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Petris . 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Craven. 

SENATOR CRAVEN: Aye. 

SECRETARY WEBB: Craven Aye. Senator Roberti. 

CHAIRMAN ROBERTI : Aye . 

The vote is five to zero; confirmation's recommended 



13 



to the Floor. 

Congratulations . 

[Thereupon this portion of the 
Senate Rules Committee hearing 
was terminated at approximately 
3:22 P.M. ] 

— 00O00 — 



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CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the 
State of California, do hereby certify: 

That I am a disinterested person herein; that 
the foregoing Senate Rules Committee hearing was reported 
verbatim in shorthand by me, Evelyn Mizak, and thereafter 
transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

^j/ IN WITNESS WHEREOF, I have hereunto set my hand 




this O day of September, 1993. 





EVELYN jy ; MIZAl 
Shorthand Reporter 



240-R 

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